I’m already short (I sold) two April 35 puts on VIP. I tried selling April 45 calls, but set my limit to high. I let a lot of cash slip away on that as I watched VIP come off its highs and finally lowered my limit a couple of times and then just went with the April 40 calls. While VIP was around $34.65 my limit order hit and I sold three uncovered April 40 calls (VIQDH) and received $347.74 after commissions.
My plan is for VIP to finish next month between 35 and 40 again, but if it doesn’t, I have about $3.80 cushion to the downside and $2.55 to the top side per share. I actually think VIP will start moving back up again soon since it failed to stay down this morning after bouncing very briefly off of 33.05. I just opted not to take the chance of a deeper fall without cutting my losses some. Now all I have to do is sit back and watch it with trade alerts set to text my phone whenever it gets above 39 or below 34 again.
On what basis did you short VIP? I think its a great company.
I agree that VIP is a good company and I started my position by selling naked puts so I could get into the stock if/when it came back below 35. Once I saw it moving down instead of up I decided not to fight the masses in their push to make VIP decline, but to profit from it. Good companies do not always mean good short term (<2 mos) stocks. I sold the calls as somewhat of a hedge to my puts and a way to squeak out a little more profit from a stock I was already tracking. This market is screwy enough right now that I don't think (maybe more of a hope) that VIP could come back that high before I could get out. With options sold on both sides and the range of $35-40 as full profit, I think I'm not even being terribly risky.
The delta of my VIP position is at 29.60 at closing on 3/6: +102.80 from my puts and -73.20 from my calls. As I mentioned a few weeks ago (I think while discussing this same type trade on VIP last expiration) I follow Delta on my options and only sometimes actually use it to influence my trades. For now, I'm trying not to be completely delta positive like I was almost all of last year. So far my adjusted stance is working. I just wish I had started this before the January smack down.