LDK Solar Cash Crisis

We tried a play on LDK Solar last month.  We tried to go long by selling puts at $7.  That would have been a good strategy for about a month as this was not a buy and hold stock.  The guys over at Greenstocks Central reported yesterday that the CEO is trying to come up with a new strategy for funding.

the CEO stated in an SEC filing, “If we do not successfully execute our liquidity plan, we face the risk of not being able to continue as a going concern.”

LDK Solar has dropped from over $9 to under $7 in the past two days.  This is a perfect example of why managing your sell stops is important.  Looking back at the chart some well placed trailing stops would have exited the position on Nov 24.  There was also a strong jump up on Dec 4 where setting a stop at $8.50 would have saved some profits.  The slow stochastic is showing an uptick in the %K line, but this may continue to sell down. 

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