I entered a long stock position in $WLT on 9/26/2013 and have added Options pieces along the way. Here is the current status:
- Long stock
- Short the November 22 weekly 17 Calls
- Long the December 17.5/14 Put Spread
One of the reasons that I could add this Put Spread for December was because I had collected some significant Option premium over the past 2 months. Now that I have some good distance from my entry it was time to add protection. The $14 lower Put strike was chosen because it is just under my initial entry. This Put Spread gives me $3.50 of protection until December expiration.
Being short the weekly Calls against the stock allows me to make an adjustment each week – since the Calls are covered – to build up more Option cushion.