Earning 9.6% in 1 month's time

China, the largest aluminum-producing nation, has tried to limit smelter construction to curb energy consumption. Over the next several years it could be a challenge for new smelter construction to keep pace with demand growth.

Hence if production of aluminum in China is reduced due to curbing energy consumption, we should see aluminum price breaking new highs.

Al is now trading $2821/ $2826, I would not mind have a long position at $2700.

If u sold 2 lots of Al Put option, strike $2700, Jun07, premium received is 19 x 25 x 2 = USD950.

Margin required is USD4950 x 2 = USD9900.
Yield would be 9.6%.

Earning 9.6% in 1 month's time is very attractive!

http://basemetal-trading.blogspot.com/2007/05/sell-aluminum-put-option.html

If China cuts down on production (which I can't see them doing saying no to $$ and economic development but thats another thing) thers nothing stopping other countries such as Aust from ramping up production to fill the gap.

It'll be interesting if you're right though.

shinobi346 said:

If China cuts down on production (which I can't see them doing saying no to $$ and economic development but thats another thing) thers nothing stopping other countries such as Aust from ramping up production to fill the gap.

It'll be interesting if you're right though.

Click to expand...

Time will tell if I'm right.

Today aluminum is trading at $2815/ $2818, my sold options are still good for me.