Stock Collars

[Edge]

Have $115K of borrowed funds into it, and closing equity today $221K.

Nice! That is fastlane. Slowlane people might shy away from trading borrowed funds, but you were comfortable with your downside risk and able to adjust to stay within your risk tolerance.

 

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[kidgas]

Thanks. I have lost $80,000 borrowed funds in the past (year was 2000 or 2001) and have spent quite a bit of time and effort (through reading and trading) trying to figure out what would work for me. I think the bottom line is to not give up a big loss. The protective puts help quite a bit, but I also try to calculate each weekend what a 30% opening gap on every stock holding do to me. It's not a big deal except in this particular account with portfolio margin since the leverage is so great. That is why I am eager to begin playing with only house money in the next few months. The system can handle a prolonged market decline but a major gap down could hurt.

 

[kidgas]

Expiration is tomorrow so let's take a few moments to review what might happen:

CELG: half the position should be called at 70 so I picked up some Nov 65 puts for the other half...will sell Nov calls, either 70 or 75, next week. Cumulative basis is 70.4

CTXS: looked like it might not get called out after earnings. At the open, picked up Nov 35 puts for 0.30/share. However, stock bounced back and may get called after all. I don't really like this one. Will let it get called and sell the puts for whatever I can get. Basis is 38.61

DRYS: just holding until Nov...have 100 shares that will be called

GG: no issues. Will have some called at 27.5 and 30. Have positions going into Nov.

HAL, IMCL, PAAS: Nov positions. No adjustments.

VCLK: Have some shares that may end up carrying over to Nov so bought Nov 22.5 puts today. If they get called, I may go ahead and buy back next week and sell the 25 calls.

WDC: Should be called unless market down big time. Will have to watch into the close.

I don't plan on any additional stocks going into November but may add to current positions if there is some movement over the next few weeks. I plan on being able to extract some of the profits after tomorrow. Have $115K of borrowed funds into it, and closing equity today $221K.

Well, Friday was certainly an interesting day, but I survived and equity is back to where it was before the correction. Updating the above:

CELG: Did not get called out since it closed at 69.96. I had to purchase additional Nov 65 puts on Friday. Right now, I am giving it a few days to see if CELG climbs into earnings on Thursday. May sell Nov 70 calls on half the position prior to earnings. Mentioned today on Fastmoney as possible buyout candidate for big pharma.

CTXS: Did not get called out but sold it on Monday at 40.10. Closed out put position. Annualized return 34%.

DRYS: Still holding. Quite volatile last two days. Spent some of the profits on higher strike puts. Now hold Nov 110 and 105 puts with 115 and 125 outstanding calls.

GG, HAL, IMCL, PAAS: No major changes. HAL rebounding somewhat following SLB earnings Friday and its own earnings on Monday. IMCL also mentioned as possible buyout on Fastmoney tonight. Some of GG got called out...shares that had been purchased in mid 20's.

GILD: Forgot to mention above. Had a nice runup so I exchanged 37.5 puts for 42.5 puts at fairly low cost locking in a guaranteed profit on half of my shares...just need to hold til November expiration since I have 42.5 put and 42.5 call. Still have half a position that is open to sell Nov 45 calls. Will give it the rest of the week for higher premium, then take what I can get.

VCLK: Had some shares called out. Was up over 4% on Friday...go figure. That was after purchasing some extra puts earlier in the week since I thought it would hang close to 25. Well now it is working its way back down and I am selling off some of the extra puts since I don't want to add to the position at this time.

WDC: Did not get called but sold on Monday at 25.05. Sold Nov puts to totally close position at an annualized return of 32%.

Also, I calculated the "worst case" scenario tonight...a major opening gap down on all stocks at one time. The good news is that I would not be wiped out. I have occasionally found myself in that position such that I have to increase the number of puts covering certain positions. Right now worst case is a loss of 29%. This is greater than a typical stop loss but not bad, in my opinion, considering the amount of leverage (essentially 11:1).:banana:

 

[MJ DeMarco]

Well, Friday was certainly an interesting day, but I survived and equity is back to where it was before the correction. Updating the above:

CELG: Did not get called out since it closed at 69.96. I had to purchase additional Nov 65 puts on Friday. Right now, I am giving it a few days to see if CELG climbs into earnings on Thursday. May sell Nov 70 calls on half the position prior to earnings. Mentioned today on Fastmoney as possible buyout candidate for big pharma.

CTXS: Did not get called out but sold it on Monday at 40.10. Closed out put position. Annualized return 34%.

DRYS: Still holding. Quite volatile last two days. Spent some of the profits on higher strike puts. Now hold Nov 110 and 105 puts with 115 and 125 outstanding calls.

GG, HAL, IMCL, PAAS: No major changes. HAL rebounding somewhat following SLB earnings Friday and its own earnings on Monday. IMCL also mentioned as possible buyout on Fastmoney tonight. Some of GG got called out...shares that had been purchased in mid 20's.

GILD: Forgot to mention above. Had a nice runup so I exchanged 37.5 puts for 42.5 puts at fairly low cost locking in a guaranteed profit on half of my shares...just need to hold til November expiration since I have 42.5 put and 42.5 call. Still have half a position that is open to sell Nov 45 calls. Will give it the rest of the week for higher premium, then take what I can get.

VCLK: Had some shares called out. Was up over 4% on Friday...go figure. That was after purchasing some extra puts earlier in the week since I thought it would hang close to 25. Well now it is working its way back down and I am selling off some of the extra puts since I don't want to add to the position at this time.

WDC: Did not get called but sold on Monday at 25.05. Sold Nov puts to totally close position at an annualized return of 32%.

Also, I calculated the "worst case" scenario tonight...a major opening gap down on all stocks at one time. The good news is that I would not be wiped out. I have occasionally found myself in that position such that I have to increase the number of puts covering certain positions. Right now worst case is a loss of 29%. This is greater than a typical stop loss but not bad, in my opinion, considering the amount of leverage (essentially 11:1).

Great write up ... some speed++

 

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[kidgas]

Did not like price action on CELG today, and with earnings in the am, I decided to sell some calls to take in some cash. Sold some calls on GILD as well. Overall, basis in the stocks looks like this:

CELG: 69
DRYS: 108.42
GG: 29.16
GILD: 42.75
HAL: 39.76
IMCL: 42.94
PAAS: 28.19
VCLK: 25.33

Also, picked up some CY today. Got the Nov 30 puts for 0.40 and the stock for 35.04. Waiting to sell the Nov 35 calls for 2.05 but will only give it til the end of the week. After that, it is unlikely that I will do much until after November expiration unless some of these stocks starts moving dramatically one way or the other. Sometimes, I think just waiting is the hardest part.

 

[kidgas]

Well, the market presented an opportunity to illustrate how I use collars, so here goes:

I first purchased 2000 shares of CELG on 9/11 at 68.70, buying Oct 65 puts and selling the Oct 70 calls. As the stock rose, I picked up another 2000 shares at 72.45, buying the Oct 70 puts and selling Oct 75 calls. CELG went up and down and as October expiration neared, it looked like CELG would end below 70. So, I sold the October 70 puts on Oct 19 for 0.30 and purchased Nov 65 puts to cover 4000 shares. On October 19, CELG closed at 69.96 so I kept all shares.

Then, I sold the Nov 75 calls and Nov 70 calls on Wed prior to earnings release this am (it would have been better to sell the day before but hindsight is 20/20). So, going into earnings I held 4000 shares at an overall basis of 69 with 65 puts and outstanding 70 and 75 calls.

Well, CELG did not please the street and the stock was indicated to open under 65 this am. I watched as CELG fell to 60.20. At that point, I bought Nov 55 puts and planned to buy 2000 more shares and sell the 60 calls in the money so my basis in those shares would be about 58, but optionsxpress wouldn't let the order go through despite it looking like I had enough buying power. Oh well, I was able to finish the rest of the plan which was selling the 65 puts and buying the 60 puts for a 2.50/share credit. That is typically about the best you can do with a $5 difference in strikes. I then bought back the Nov 70 and 75 calls. Now, I have 4000 shares and 60 puts (40 at 60 strike and 20 at 55 strike). My overall basis is 67.11. The plan is to sell the Nov 65 calls at a credit of greater than 2.11, which if called out would generate a slight profit.

I have a GTC limit order at 4. If this happens in the next 3 or 4 days, great! The profit if called is 1.89 on 4000 shares. Not bad for a stock that I purchased at higher prices. Just buy-and-hold, and I lose money. Now, I can salvage something out of the position. If it doesn't happen, I will take what I can get by Wednesday so I can mitigate some of the loss. If I had been able to buy the other 2000 shares, I might have ended up in a better position, but I can't complain. We are driving to Michigan tomorrow to visit family during the day, so I won't be able to even see what is going on in the market. But the order is placed and if CELG hits about 67.5, I would expect the calls to sell for the limit of 4.

Anyway, I just thought I would point out the rationale behind my use of collars...namely protection of as much capital as possible. I also think this illustrates what one can do to salvage a position and even possibly turn a profit on a declining stock. I have done this with STX this past year and with DRYS as it dropped from the 60's to 49 or so and added to my DRYS stake only to have it perform incredibly well.

I would be pleased to answer any questions anyone might have.

 

[kidgas]

Slight change in direction. I will update many of my positions for you in the next few weeks--only two weeks til Nov expiration.

Anyway, I am liking the results of my trading system and have told a few colleagues that I finally have a trading system with which I am comfortable. Several know of my trading interest. I am planning (and acting) on beginning an investment partnership (aka hedge fund). I have let 4 colleagues know and will be letting more know in the future. I sent an email to my accountant this afternoon to see if he had any insight or direction. Finally, I sent an email to the securites division at the Indiana Secretary of State and left a voice mail informing him of my intentions and seeing what direction he has.

If anyone has a good name for a hedge fund, let me know. I believe Amaranth is taken.

 

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[bflbob]

If anyone has a good name for a hedge fund, let me know. I believe Amaranth is taken.

Armagedon?:smx3:

 

[Poudda]

That was a totally awesome read! Thanks for the education. Rep++

 

[Edge]

If anyone has a good name for a hedge fund, let me know. I believe Amaranth is taken.

Kidgas LP !!

 

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[kidgas]

[Armagedon?:smx3:

LOL:smilielol:

 

[kidgas]

Since I had some time, I thought I would post an update. For those who are new, let me explain what I have been doing. Last October, I started trading using a system of collars. Collars involve buying a stock, purchasing a protective put, and selling a covered call. I tried doing covered calls for awhile, but the biggest problem is that you have all your good stocks called away and are left with all the crappy stocks that have lost 50% (but you kept that 5% premium--big deal). Before you know it, all your capital has been pissed away, and you need massive gains to break even.

Anyway, I started doing this in October of last year in a business account with a $20,000 second mortgage on a rental house. This spring, I was able to obtain 2 lines of credit for $50,000 each. I kept trading with the increased capital at ETrade and was making decent gains during the spring and summer. (I have also used the technique in my retirement account since January.) In August, I transferred the ETrade funds to Optionsxpress to take advantage of portfolio margin, which has really enhanced my returns. Of course, risk is an issue, and I try to look at my level of risk on a weekly basis. I also have pulled out $25,000 in profits recently so that currently I have $95,000 personal equity at risk.

The ETrade account had an IRR of 28% annualized. The Optionsxpress account is much better such that I am looking into the requirements for forming an investment partnership. Now for the update:

I took a loss on VCLK finally closing out the position totally. I could have messed with it to avoid the loss but it would have taken time, and I felt the buying power could be used more effectively elsewhere. So, I purchased additional PAAS and CY. Today, I will look at purchasing additional GG.

Lessons learned from VCLK: I purchased a grand total of 17,000 shares at 24.20, 22.50, 29.35, and 24.85. My overall average purchase price was 25.70 and I ended up losing 0.61 per share for the 5000 shares I had left at the end. Some of them were called out along the way. All the called shares would have generated a net profit. So, for 436,900 (25.70 x 17,000) invested, I ended up losing $3,050 or less than 1%. But it ended up being about 1.5% of net equity due to margin. Overall, I think the collars helped manage the volatility as the stock swung from 24 down into 22's up to almost 30 and back down. I ended up selling yesterday Nov 25 puts for credit and the shares for 23.60. I could have rolled out to December but I wanted to add to other positions rather than force VCLK to work.

 

[randallg99]

I can't think of any names... but maybe Kid Gas... heh.

I have been trading options on DRYS in the past month. After trying to implement a collar and other limited-risk trades, I found myself caught up in a whirlwind of volatility. I picked DRYS because I have been an off-on holder. Even though I am a long term holder by nature, I have sold DRYS when a fast run up occurred. I missed a lot of upside along the way, but taking profits never put anyone in the poor house.

Not that I found a holy grail... but here is what I have found, and I think it only works with high volatility stocks.

1. I have bought and sold 100's of calls and puts with DRYS (and only DRYS) in the past 4 weeks only using a small percentage of portfolio that I am not concerned about losing.
2. They are all Dec and Jan at the money or just out of the money.
3. I wait until at least noon-time
4. I have bought calls and puts simultaneously at the same strike... ATM
5. The relationship, because of volatility is interesting to watch. In the same day, you can make a 10% premium on both the put and the call due to the gyrations.
6. I usually only hold for 2-5 days on each open position.

After commissions, I am up about 12% for the past 4 weeks with this strategy.

That's it.... no brain surgery, nothing too complicated. All I wanted to do was hedge the short term gains so I can take advantage of long term status... but I am creating more significant short term gains.

 

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[Edge]

4. I have bought calls and puts simultaneously at the same strike... ATM
5. The relationship, because of volatility is interesting to watch. In the same day, you can make a 10% premium on both the put and the call due to the gyrations.

This is really a long straddle which can be used as a play on volatility more than price. Keep in mind what drives volatility when you put this trade on. Sharp moves (especially down) can be your best friend with this position. Flat or slightly bullish markets will kill your vols.

 

[zaiteku]

Hey Kid,

I remember you from the RDPD forum. Nice write up on collars so far. Ive been trading collars as well, starting in my retirement account, and now moving into my margin account as I don't have much time to watch the markets thanks to my new J.O.B., it fits my lifestyle well, allowing me to use large amounts of capital, at low risk. I guess the main difference between our styles seems to be that because of my time, I tend to only trade and collar one stock. Currently AAPL. Then I trade spreads around the collar depending on how its moving, but I pay for the spreads using the income from selling all those Calls each month. Then buy more stock and repeat if possible. If AAPL ever runs out of gas and premium dries up, Ill have to switch to another stock, but so far its still growing at a steady, rather predictable clip. Thanks for the detailed posts, I look forward to reading more in the future!

-Ty

 

[kidgas]

Thanks, zaiteku. I, too, like the collars for the reason you describe in that you don't have to pay constant attention. It is working wonderfully in my retirement account. I have started to play around with portfolio margin and have come to realize that the amount of margin creates another set of variables. But, there is nothing like experience to educate oneself.

I had a little set back with the decline in the market because of the margin and so I learned quite a bit there. I think your plan of working with one stock works just fine. I think I may have gotten too diversified and increased my risk in that fashion. So, I have trimmed back to just 5 stocks in the margin account and am paying more attention to the puts and downside risk.

 

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[zaiteku]

I have a margin account, but I don't use margin for the collars, I too ran into that problem. Ill use margin on my directional positions though. For collars I tend to pick a stock I really like, that I would not mind holding for a while, that has decent premium. I dont pick the stock with the best premium, but a company I like that is decent. This way I dont mind sitting on all that stock. For Collars since the risk is so low, Ill buy a ton of stock. For AAPL Ill buy 500 shares minimum initially, but aim to ramp up to around 1000 (I know for some people this is not a lot, but for me its a lot). Ill generally put my Put very tight, like right under where I bought the stock for, and Ill buy the Put for 1 year out, just so I no longer think about it. This has some obvious big drawbacks, but for me, it helps get rid of the fear emotion, which Ive learned can be a killer in trading. Next, I have to start getting some controlled Greed in there. So I calculate where I think the stock is going, and sell some Calls. This is the hardest part, as I have to try and pick the right strikes. I use support and resistance a lot for this, and since I am trading AAPL, I have to take news and events into account as well. So I sell the Calls 1 month out and either aim to capture stock movement, or if the stock is not moving much, Ill try and just grab all the premium. If the stock is not moving, youd be surprised how fast you can pay off that initial Put (the cost of doing business). The rest of the year is profit. If the stock moves up, I can buy back the Call and sell out higher then close my Put position and let it run, or ratchet up my Put. You can even change the Put Strike month if it looks wise. If the stock bombs through my Put, I typically look for a base to take profits on the Put, then Sell it, and use the proceeds to buy more stock. Unless I now hate the company and then I might just sell the stock, let the Put ride, then sell the Put later for even more gain. of course on a stock bomb you can also buy back your calls and sell more calls on the way down and keep buying them back. With the Collar there are a million things you can do, and yes some way are better than others, but I have found you really have to balance the return with how the risk is going to affect your emotions. For me, trading such a large position, I need to have the risk reduced by having a tighter Put strike price, and enough time to not think about it. Thats just me. I know some guys that are cool with dropping it 10 points down. I couldn't sleep. Im after the steady returns from the collar, which every month can easily be 3-10% after Put expenses. Factor in the large position, and its not too shabby although you can make more doing other things, like day trading perhaps, the time involved is also less. Sometimes getting called out is an option I go for as well, then, at a good point, re-enter the position and collar it again. I find if I like the stock, I almost don't care what direction its moving in, you can make money. The one really bad thing is if the stock were to lose volatility for a long time, you wouldn't be able to make as much on the Calls you sell each month. I found doing a collar on stock I didn't like made me a little hasty when making decisions, which on a large position was detrimental. For my directional positions I just use the 1% rule, I limit my losses to no more than 1% of my total portfolio, and use stops and Spreads to keep it there. This is just my system, and its totally not for everyone, but I thought I might share it, and add to the already great write up and thread Kidgas has done already!

 

[zaiteku]

hey Kidgas,

how are your positions going? or do you have any new ones? I just bought 200 more shares of AAPL on the little dip we had and locked in at 190. Its going to be interesting going into Macworld in Jan.....

 

[Edge]

Kidgas - Haven't heard any updated lately.

Have you made any changes to the way you structure your collars in this market? How's the setting up of the hedge fund going?

 

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[kidgas]

Well, you are right that it has been awhile since an update. I'm not exactly sure how to start so I will come right out with it. I was somewhat embarrassed to post since I lost quite a bit of money. I know Chris will get all over me about position sizing. The subprime issue exposed the weakness in using as much margin as I was using (because of portfolio margin). However, it was not so much a systemic problem as it turned out to be a management problem on my part. I clearly made the mistake, broke a few of my rules, and am paying the price.

So, the bad news:
1. I lost money because I broke my own rules.
2. Hedge fund set up is on the back burner. I refuse to lose anybody else's money until I have a sizable stake of my own.

The good news:
1. I learned a lot.
2. I experienced less than a $1 Billion writedown.
3. The collar system is still working in the retirement accounts since they are cash only.

For 2008, I will be focusing on shoring up the balance sheet. I am also using my creative juices for a project that I am working on which should be up and running in the next month. I hope to be able to share quite a bit more about that in the coming weeks.

In the meantime, my only stock positions are in the retirement accounts, and I can update them for everyone to see. I tend to take a 2 to 3 month horizon on my collars since I don't want to trade these as much. Some of this info is from memory since I don't have my personal computer with me to give an exact basis.

GG: Half are protected with Apr 30 put and have an Apr 37.5 call out. Half protected with Feb 35 put and have a Feb 40 call out. Overall avg basis is about 34.50
EMC: Protected with Apr 15 put. Have been adding on the way down but unable to sell call for several months. Just waiting for rebound and lowering my basis. Currently basis is about 22.5.
YHOO: Apr 20 put. No call out. Did have Jan 32.5 c expire worthless Basis 26.50. As with EMC just biding time and adding as able to decrease basis.
VCLK: Mar 20 put. No call. Basis about 23.5.
CY: Mar 17.5 put and Mar 15 put on 2 different tranches. Bought some more this week after raising cash by selling a Mar 30 put. Previous basis about 34...now down to 24. 1/6 th of position is a Mar 15/Mar 20 collar. Still have some outstanding Mar 40 calls from when price was higher. Will wait for recovery and still have nice profit if CY even gets between 25 and 30.
DRYS: Bought some because the volatility helps with premiums. Original purchase in 80's and doubled stake under 65 selling puts for cash. Now basis of 74 total. The second purchase has basis about 63 so I am looking at selling the Mar 65 calls on the next runup. All shares protected by Mar 60 puts.

That is all for now. I am still learning and reading. I appreciate this board and trust that you will forgive me for my personal embarrassment. I know no one here will be overly critical. You can bet I have already taken care of that aspect.

 

[Edge]

Sorry to hear about the setback, but also glad to hear you've overcome it.

Actually the main reason I was asking was because I was curious to hear if you thought anymore about a reverse collar approach that I mentioned ealier. Basically a covered short stock position with a long call for protection. Short stock with short put and long call.

It seems to me that the collars you were using are a bullish strategy and now that we are in a bear market you might find more opportunity doing the opposite. There is a lot of premium in those short puts with the vix touching 30.

 

[kidgas]

Edge,
I have thought about the reverse collar, but have not actually tried it yet. I may end up doing that after some of my current positions sell out, and I have some cash.

 

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[kidgas]

Thought I would give a quick updated note on the YHOO shares I hold in my retirement account. I have been working with them, buying more on the way down and cashing out puts, letting calls expire worthless, etc since Feb of 2007. Already had taken a small profit from Jan 07 to Feb 07 when I opened the current position.

Since I was working from memory earlier my basis is actually 26.18 with Apr 20 puts and no outstanding calls. I have 2 options: sell out everything on the news today (Microsoft offering $31/share in stock and cash) or sell some Apr calls and trust a deal might get done. I think I will wait and see what the premiums are on the open and decide if it is worth the holding risk.

 

[kidgas]

OK, so I ended up selling the Apr 30 calls for $1.25 when YHOO was trading around $28.65. That puts my basis at $24.99. I still hold 50 odd lot shares that I will try to sell around $29 in the next few days. Lots of shares trading hands today as people look to handicap the odds of a deal. I figured my options were to take a guaranteed $2.47/share today or take a shot at an additional $2.54/share over the next 2.5 months. I felt it was worth the risk to try and double the amount of profit. If nothing else, it shows that YHOO is in play and my basis is under $25. If a deal doesn't get done, I will just let the calls expire worthless and continue to lower the basis while I wait.

 

[kidgas]

Brief update: The GG Feb 40 calls expired worthless this past weekend. I had purchased some March 32.5 puts and sold the Feb 35 puts for net debit of 0.95. I will be placing an order to sell the March 40 calls for 1.50 today with the plan that it execute sometime this week. If not, I will take what I can get for the Mar 40 calls or March 37.5 calls next week. I also think I will be selling some Mar 25 VCLK for whatever I can get this week as well. Otherwise, I suspect little change. Next month, I plan on adding to some positions to decrease basis and will detail that later.

 

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[kidgas]

The March 40 calls on GG sold today for 1.55. This lowers the overall basis on all my GG shares to 33.92. Could I have gotten more if gold continues to rise? Absolutely. Could gold turn around and drop $30 in one day and begin to slide? Absolutely. My point is that I don't know what will happen. Plus earnings tomorrow could cause almost anything to happen despite the gold price. My goal is to take monthly and quarterly gains adding to positions on pullbacks. This is in my retirement account so I have plenty of time.

Right now I have half of GG with a March 32.5/40 collar and half with an Apris 30/37.5 collar. So, I will hang out til the third Friday of March and see what's going on. I have other positions expiring in March as well so March will be fairly busy.

 

[kidgas]

Quick update:

I sold half of each GG collar this past week by buying back the calls and selling the stock. I did this because I though GG had run up too fast. I could be wrong but I wanted to get some cash and sit back for a week or two. Ultimately, the net effect on my basis was to lower it to 28.12 with outstanding calls (March 40 and April 37.5). I also purchased some March 40 puts to be part of a 45/40 or 42.5/40 collar when I likely get back in. This also locks in the guarantee that I will sell some GG shares at 40 on the third Friday of March regardless of the price.

On a side note, I am hoping that DRYS will drop to about 70 at which time I will take the intrinsic value of the March 75 puts and purchase some additional shares lowering my basis in that stock.

Currently, the stocks and basis are:
GG 28.12
YHOO 24.82
CY 25.69
VCLK 23.67
EMC 21.38
DRYS 83.34

I am waiting until March to make any adjustments to CY, VCLK, EMC.

 

[kidgas]

How's this for market timing? I bought GG at 44.15 about 30 minutes prior to the decline in the price of gold and GG ended up closing at 42.71 for a nice 3.2% loss.

Fortunately, that is only half the story and illustrates the value of the collar (for me at least). I immediately sold the March 45 call (recall I owned the March 40 puts from last week). So, the net result was 44.15-1.30 for a basis of 42.85 plus the 0.55 I paid for the puts to equal 43.4 overall basis. The loss has been cut in half and my maximum exposure is down to 40 or 7.8% from the 43.4 basis which in effect acts as a stop loss.

I will hang out for the next 2 weeks and see what happens going into expiration.

 

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[jdub]

Kidgas,

I appreciate the information you're providing as I learn about stock collars. I've read J.L. Lord's book on collars and the book from Radio Active Trading. Is there a particular method that you recommend?

By the way, I'm in Indy and thought I read in a post that you are as well. If so, is it possible to meet up sometime to talk about stock investing strategies? I am building my network of successful investors so that I can learn as much as possible from them and would appreciate any time you could spend with me.

 

[kidgas]

jdub,
Thanks. Yes I am in Indy. I would like to meet sometime. I have Lord's book but did not know about the RAT book. It looked interesting on the web. I will talk more strategy tomorrow and provide an update tomorrow since today was option expiration. Right now, it is late and I'm heading to bed.