What protective put if any in this situation?

Discussion in 'Options' started by Corto, Jan 9, 2019.

  1. Corto

    Corto

    I have a Feb long 35 call in TNDM bought at 4.95, currently at 8.10/9.30.

    Rather than take profits now I'm thinking of letting it run and buying a protective put.
    What would you advise and why:
    Buy Feb 35 put at 1.80/1.90
    or
    Buy Feb 42 put at 4.60/5.20

    Thank you!

    By the way, how do you make the image larger that an icon?
     
    • TNDM.jpg
      TNDM.jpg
      File size:
      121.6 KB
      Views:
      13
    murray t turtle likes this.
  2. Robert Morse

    Robert Morse Sponsor

    My advice would be to not hedge a long call with a long put.
     
  3. srinir

    srinir

    I would rather roll up the call. (But 40 Call and sell 35 call)
     
    iprome and Robert Morse like this.
  4. Would you buy the call at 8.70? If not, it's time to sell. The put would be a singularly bad way to protect those gains because you lose a lot of directional exposure and pay a lot more in time premium.
     
    murray t turtle and tommcginnis like this.
  5. tommcginnis

    tommcginnis

    I know nothing about the stock, but I would consider selling a near-OTM call -- capping gains at
    call2 - call1 + [call1cost - call2price]
    still carrying risk of gains lost from
    mkt - call1 + [-call1cost]
    but now mitigated by the premium from call2price.

    It's *still* a trade. It's *still* requiring a market assessment, of probabilities against resulting gain/loss.

    My own bias is against buying options. (And true: I'm biased *towards* selling.) I just like premium in-hand, and a future I don't need to specify *exactly* -- just enough to put bounds in place.... :D

    (For that matter, what if you sold two at $45, and bought one at $47.50 or $50? Hmmmmm! :rolleyes::sneaky::D;) )
     
  6. Overnight

    Overnight

    By clicking the "full image" button when you're replying to, or making a new post.

    corto.jpg
     
  7. TommyR

    TommyR

    1)sell some of the stock 2) sell a topside call in some or all of the notional depending on your conviction.
     
  8. TommyR

    TommyR

    respect for buying a heavy premium call on the lows though
     
  9. destriero

    destriero

    Don't straddle or strangle the call. You've got good gains and would be buying a a silly vol-figure. I think that the index may be going lower, so I'd take gains or perform the following: leg into the long fly for Feb by selling two of the 45C and buying one of the 55C.

    You can effect the ratio for Feb at a 4.80 credit (marketable at 4.80). You'd own the 35/45/55 call fly from fifteen cents (4.95 paid on call; 4.80 received on ratio).
     
  10. %%
    WEll, congrats on the profit. But with underlying chart in a longer term downtrend, earnings below average, having gone from $80 to 19 area in super speed. run +dont walk, to the exits.If you have traded it a lot for profits, could risk it all, if you'r OK with losing it all. Its above 200 day moving average; but only 20th rank in group. NOT a prediction; FEB tend to be a short month, in stocks.:cool::cool:
     
    #10     Jan 10, 2019