Yesterday I did a 10 contract “Triple Play Hedge” on Skechers (SKX). The stock has been moving nicely after receiving a few upgrades. I started with a normal “Triple Play Hedge,” I bought 1000 shares of the stock and sold 3 Call as insurance in the case the stock went down. The 1st Call is Covered and the 2nd and the 3rd Call were Naked. Yesterday the stock moved pretty good to the point the 1st Call went In-the-Money and it moved almost to the point my 2nd Call was At-the-Money. Today with the market down a little and SKX following, I decided to buy another 1000 shares of the stock at $26.75 which Covered my 2nd Call. Below you can see I now own 2000 shares of the stock and the 1st and 2nd Call are covered. Let’s see how this “Triple Play Hedge” plays out.
Skechers Triple Play Hedge
6/5/17 – Buy 1000 Shares SKX @ $26.90
6/6/17 – Buy 1000 Shares SKX @ $26.75
1st Call – Sell to Open 10 SKX 6/9/17 $27 C @ 45¢ (+$450) Covered
2nd Call – Sell to Open 10 SKX 6/16/17 $27.50 C @ 50¢ (+$500) Covered
3rd Call – Sell to Open 10 SKX 6/23/17 $28 C @ 55¢ (+$550)
As I write the stock is up to $27.20 after buy my shares today at $26.75.
Steve
The Options Coach