After an amazing jump in ANR's share price over the last couple weeks, I decided to buy a protective put to manage my downside risk. One would normally consider this odd, as the ANR has been as much as $4 (~11%) above my covered call strike price, however, there still remained an additional $1 of time premium to be worked out. For this reason, I decided to buy a put as opposed to close out the position completely. ANR has been an extremely volatile stock falling as low as $22 in the past few weeks, and now rising to $34. If ANR does make it to August expiration above $30, then I have decreased by potential gain by about 2%, but greatly lowered my downside risk. The new profit/loss info is below:
5/20/2009 -- Bought 100 ANR @ 29.26
5/20/2009 -- Sold To Open 1 ANR June $32.50 Call @ 1.24
5/20/2009 -- Bought To Open 1 ANR June $20 Put @ .3
5/21/2009 -- Bought To Close 1 ANR June $32.50 Call @ .55
5/22/2009 -- Sold To Open 1 ANR June $27.50 Call @ 1.45
5/27/2009 -- Bought To Close 1 ANR $27.50 Call @ 2.18
5/27/2009 -- Sold To Open 1 ANR $30 June Call @ 1.09
6/16/2009 -- Bought To Close 1 ANR $30 June Call @ 0.15
6/16/2009 -- Bought To Open 1 ANR $20 June Put @ 0.5
6/25/2009 -- Sold To Open 1 ANR $30 August Call @ 1.90
7/6/2009 -- Bought To Close 1 ANR $30 August Call @ 0.5
7/9/2009 -- Sold To Open 1 ANR $30 August Call @ 0.75
7/28/2009 -- Bought To Open 1 ANR $27.5 August Put @ 0.60
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Stock Purchase Cost: $2926.00
Current Cost Basis: $27.61
Maximum Downside Risk (due to Put): 0.4%
Possible Max Upside: 8.53%
Annualized Max Upside: 33.12%
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