yos9694
You taught me something. Thank you.
To pass on his lesson.
Buy 100 of the stock @ 126 or so each (the price when I first wrote about it)
[The cost $12,600 - more than I care to spend on one gamble. But you buy it on margin. That is- you use the money of the brokerage house. But that cost lots of money. Not in this case, because it's for such a short time. 2-3 weeks. At an interest of 7.5%, each week cost less than $20. So 3 weeks cost up to $60 per 100 stock.]
(In the same purchase transaction) Buy a put option at a strike price about $4 less than your purchase price. That is - buy the ability to make someone else buy the stock from you for $122. This might have cost $3 per stock, which you have to buy in lots of 100 for each 'option'.
So your cost per stock is 126 + 3 =$129
If the stock goes up:
to $135, you sell the stock. 135 - 126 - 3 = $6 profit
to $128, you sell the stock. 128 - 126 - 3 = -$1 loss
etc
If the stock goes down, as it actually did:
a) It goes down below 122 - the put price: you sell the stock for 122. net cost: -126 - 3 + 122 = -$7 or a maximum loss of $7.
b) If it goes down to somewhere between 126 and 122: you lose (126 - new stock price) + 3 (put premium)
But this will max out at the $7 of scenario (a).