A Collar review in ExOne

I have long stock position in $XONE in the long-term account that includes a February 60/55 Collar. A few questions this week about when – if at all – to take this trade-off given the continued stock weakness.

First, a look at the trade activity since beginning a position on 9/6/2013:

XONE_BAbove is a look at some information from my trading journal. The current long stock entry is $55 (from a Buy Stop on 12/24). The latest Option adjustment was on 01/17 to create the February 60/55 Collar. I have an Options Net of $22.20 so quite a cushion to work with.

One of the common steps I take when I am in this situation – long stock with a Collar & price has fallen – is to create a Bear Risk Reversal. To do this I simply sell (or Stop out) the underlying stock and the Collar becomes a BRR naturally.

The reason I chose not to do this in this case was:

1) The position is in the long-term account

2) The Puts are doing their job, protecting the long stock piece

3) The stock is expected to be volatile so I don’t want to keep exiting and re-entering (over-trading it)

4) The size of Options Net is substantial so my cost basis is sub-$35

A look at the Daily chart:

XONE_F

 

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