Review: a trade in progress starring Sohu.com Inc.

I have had a position in $SOHU since 7/26/2013. I adjusted the November Collar on 10/21 as follows (recent Position Updates post here):

  • I am short the November 85 Calls against long stock
  • I am long the November 80 Puts
  • This creates a Collar

So where does this trade stand now? Price is currently hanging out at the $75 level in pre-market action. Here are some potential next steps:

1) Do nothing. The Collar is doing its job so just let it ride to November expiration

2) Sell the stock for whatever gains exist now. The Collar becomes a Bear Risk Reversal with the Puts ITM (in the money)

3) Sell the stock for whatever gains exist now. The Collar becomes a Bear Risk Reversal with the Puts ITM (in the money). Sell downside Puts to create a Put Spread thus taking in more Option Premium (Options Net currently at +6.76)

 

  • 1nvestor

    I have elected to go with step #2 as the stock failed to hold the $75 level. The trade is now a November 85/80 Bear Risk Reversal