Rearranging the $DECK chairs

All hands on $DECK

$DECK the halls

Ok, I will stop there. Deckers Outdoor ($DECK) has been under tremendous selling pressure due to some analysts’ concerns with UGG sales. I am currently short the stock (from the break at $40) and have sold the October 35 Put at 1.90 (on 9/25/2012). Let me break this down:

  • This trade creates a Covered Put trade
  • The gain is capped on a move down thru the $35 strike, capped at $33.10 ($35 – $1.90)
  • What this also does is help offset any Relief Rally in price, to $36.90 ($35 + $1.90)
  • This creates a range between 33.10 & 36.90 wherein price can bounce around – without the need to address the position
  • This short Put does not take margin as I am short the stock

Some traders have posted some fundamental data that will surely be of interest to those that are looking for cheap stocks from a valuation perspective. So far, the market is in a battle here – just above this $35 level – to see if that is the floor for price.

 

Graphic courtesy of Wikipedia

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