The Option Collar series

I never intended for this to become a “series” on my Blog, the topic of Option Collars, but I find that they have become critical to protecting positions in this summer trading roller coaster. This week is no exception as I find myself unwinding a Collar in my long $TRIP position after a negative reaction to their earnings report.

Here are the details:

  • Long the stock on June 11, 2012 at 42.82
  • Initiated a July 45/48 Collar on July 2, 2012 for a $.28 credit (paid to have insurance, unreal). This was closed on July 12, 2012 for an additional $1.65
  • Initiated an August 49/45 Collar on July 18 for a $.25 debit

Because of this Collar, I could calmly carry the long stock position through the earnings report. And boy do I need it now. So far, I have bought back the short August 49 Call for $.05 and continue to hold the long stock & long Aug 45 Put positions. No rush to do anything there yet. Here is where the trade stands now:

  • The August 45 Put currently has a bid/ask of $8.7/$9
  • I am down $6.60 on the long stock position

 

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