Option Investor

Option Writer Portfolio - April

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COH - Coach, Inc. engages in design and marketing of accessories and gifts for men and women in the United States and internationally. Its primary products include handbags; women's and men's accessories, such as money pieces, wristlets, cosmetic cases, belts, wallets, card cases, and other leather accessories; outerwear, including jackets, sweaters, gloves, hats, and scarves; business cases consisting of computer bags, messenger-style bags, and totes; and novelty accessories comprising key fobs, charms, electronic, time management, and pet accessories. The company also offers luggage and related accessories, such as travel kits and valet trays; jewelry, including primarily bangle bracelets; and fragrance comprising perfume sprays, purse sprays, and perfume solids. The company last reported earnings on January 24th. So we may not run into earnings before expiration. Coach operates in the consumer discretionary sector that is somewhat exposed to the economic slowdown. While my local store may not be the best indicator, it is usually packed with women shopping for overprices bags.

Sector: Consumer Goods

Industry: Textile - Apparel

The April 27.5 strike still has a decent amount of premium. It should be noted that we don't usually initiate new positions this late in the expiration cycle. The initial premium yields nearly 16% with 18 days until expiration. Not bad. For those of you pushing the margin to the limit, you could sell a total of 8 contracts and still have a little margin room. A close above the 50 DMA (pink line) would be a nice confirmation. Basically I am throwing this position in anticipation of the stock closing above the moving average.

Risk Management for COH
Strike Stop = $ 27.50
Cost Basis Stop = $ 26.90
Technical Stop = $ 26.93
Premium Stop = $ 27.90

Have a nice day and Good Trading!

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