I received several questions/comments this morning regarding my current trade in $GNC. I was stalking this from the earnings reaction and was patiently looking for a bottoming process.
I ultimately decided to ease in at the $36 level and started a 1/3 position. A final flush took the stock under the $35 level for a few minutes where I instituted one of the tactical components to my trading: the Put Sale.
This is where I think some folks get confused because it involves a Put and almost always think Bearish. However, the Put Sale is a Bullish move in that I am taking the view that the price of the stock has a floor. The key part is that I want to get paid if I am wrong (the floor is not quite in for example). As long as I am close in the chosen strike, the premium collected helps lower my cost basis in the overall trade.
In the case of $GNC, I sold the August 35 Put for $1.95. This is the time to sell Puts in my opinion, nice RED day. This was also a 1/3 pos bringing my position size to 2/3.
After the bounce I sold the stock pos at 37.15 and remain short the August 35 Put. This puts my cost basis, if Put the stock, at $33.05. The stock is currently trading at 37.10