getting plugged into a trade on Plug Power

I always get interested when a stock enters a parabolic stage and today $PLUG fits that mold. Since I had no existing position I looked at finding a spot to short the stock along with a long call spread. This type of trade is called a Synthetic Put: PLUG.

Here is the trade I ultimately did:

PLUG

  • I am short stock at $11.17
  • I am long the March 11/14 Call Spread (this is for protection on the short stock piece, not a Bullish play)
  • I later sold the March $9 Puts to recoup the outlay for the Call Spread
  • The Option pieces make a Bear Collar
  • I have added a Stop on the short stock piece at $13

8 thoughts on “getting plugged into a trade on Plug Power

  1. In other words, why not just stay out of PLUG??? Then come in on the long side if/when it is appropriate,,, you know,,, good old investing. Short a penny stock? A stock like PLUG, considering it is making ground breaking forms of energy, is very risky. Again, if you don’t understand PLUG, and have to engineer incomprehensible trades that end up making really nothing,,, just stay out.

  2. My trade is appropriate in this situation. Risk is to the downside now. As far as the trade being “incomprehensible”, an Option trader with basic (or better) knowledge understands what a Synthetic Put is.

  3. I have adjusted the Mar $11 Calls down to the $10 strike as of today. So the Bear Collar is now: March 9/10/14 on the short stock.

  4. Update: there were several adjustments today on the Bear Collar: the long March Calls were moved from $11 to $10 & then to $7. I also set a Stop on the Mar $9 Puts at $.90 which was hit today. Currently I am short stock from 11.71 (still) & long the Mar 7/14 CS for protection.

  5. After the adjustment today I remain short stock and own a Mar 5/7 Bear Collar (short the $5 Puts, long the $7 Calls). The Bear Collar is to protect the short stock piece.

  6. Do you still feel the same way you did on Monday? Do you better understand this approach now?

  7. Pingback: Position Updates - 03/14/2014 | 1nvestor1nvestor

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