Investors & Friends:
Here's a summary of our investment actions from the past week.
Option Strategies - Naked Puts
1) BHP Billiton Ltd (NYSE: BHP) - Our Jan '14 puts reached 80+% of their maximum value, so we closed them out. The date we opened the trade was 5/7/12.
2) Blackstone Group LP (NYSE: BX) - Our Jun '13 puts reached 80+% of their maximum value, so we closed them out. The date we opened the trade was 12/26/12.
Option Strategies - Partial Collars
3) Coach Inc (NYSE: COH) - We bought Coach shares and protected them with Feb '13 $50 puts. We can sell calls, to complete the collar, at any time before expiration.
Coach was down 16+% this week, presenting us with a good entry point. Also, volatility was at a 5-year low, so tacking on put protection was inexpensive. We think Coach will bounce back, but we're protected if it deteriorates. Also, as volatility creeps back into the market, which inevitably it will, we can sell calls, which will pay for the puts and possibly more, making it a zero-risk trade.
The reward-to-risk profile of the investment analysis is as follows.
Bought shares @ -$50.81
Bought $50 puts @ -$1.09
Total debit @ -$51.90
Maximum reward = Unlimited share price appreciation above $51.90, plus quarterly dividends
Maximum loss (risk) = $50 -$51.90 = -$1.90
Click here for upcoming IPOs.
Lead Fund Manager
Investrio
Here's a summary of our investment actions from the past week.
Option Strategies - Naked Puts
1) BHP Billiton Ltd (NYSE: BHP) - Our Jan '14 puts reached 80+% of their maximum value, so we closed them out. The date we opened the trade was 5/7/12.
2) Blackstone Group LP (NYSE: BX) - Our Jun '13 puts reached 80+% of their maximum value, so we closed them out. The date we opened the trade was 12/26/12.
Option Strategies - Partial Collars
3) Coach Inc (NYSE: COH) - We bought Coach shares and protected them with Feb '13 $50 puts. We can sell calls, to complete the collar, at any time before expiration.
Coach was down 16+% this week, presenting us with a good entry point. Also, volatility was at a 5-year low, so tacking on put protection was inexpensive. We think Coach will bounce back, but we're protected if it deteriorates. Also, as volatility creeps back into the market, which inevitably it will, we can sell calls, which will pay for the puts and possibly more, making it a zero-risk trade.
The reward-to-risk profile of the investment analysis is as follows.
Bought shares @ -$50.81
Bought $50 puts @ -$1.09
Total debit @ -$51.90
Maximum reward = Unlimited share price appreciation above $51.90, plus quarterly dividends
Maximum loss (risk) = $50 -$51.90 = -$1.90
Click here for upcoming IPOs.
Lead Fund Manager
Investrio
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