One of the “to fade” plays this week was in $SHLD but the trade looks a tad different today. Here are a few messages from the ST stream as the trade played out:
This trade involved going short the stock (was a $59 trigger) and then looking to protect with Calls or a Call Spread. I ultimately decided on going Long the October 60 Calls at a debit of 1.62 as the initial protection. I later shorted the September 52.5 Puts for a 1.4 credit to create a Bear Collar.
The stock began to rebound so I just put in a trail stop and let it ride. The trail stop hit on 9/12 so this is where the trade does a U-turn:
The Oct/Sep 60/52.5 Bear Collar becomes a Risk Reversal in that there is no longer any stock involved. Wallah.