Option Investor

Option Writer Portfolio - July

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Yes, we are figuratively going to the well again with another Coach, Inc. position for July. For those of you that are new we origially sold the June 32.5 Puts and then also sold the June 40 Calls. We then closed the June 40 Calls to sell the June 37.5 Calls to hedge the position more. As we approached expiration with what appeared to be a tight range we then closed the 32.5 Puts to sell the 35 Puts. The June 35 Puts were stopped out at the break below the 200 day SMA and the uptrend line. Coach Inc. (symbol: COH) engages in design and marketing of accessories and gifts for men and women in the United States and internationally. The company sells its products through direct-to-consumer channels, including its own retail stores and factory stores in North America and Japan; and its online store and catalogs. Coach, Inc. also sells its products through indirect channels comprising department store locations in the United States, international department stores, freestanding retail locations, and specialty retailers.

EPS date: Approximately July 22nd

Sector: Consumer Goods

We are going to sell the July 30 Put for approximately $0.55 - $0.60 per contract. The initial return is about 17% and is calculated from the initial cash required. The initial cash required is derived from the initial margin per contract multiplied by the number of contracts and then subtracted by the initial credit (max gain). The chart below shows the moving averages and the price support/resistance lines. There is strong support at $29.95. We should find resistance from a bounce at 35 from the 200 day SMA.

Risk Management for COH
Strike Stop = $ 30.00
Cost Basis Stop = $ 29.43
Technical Stop = $ 29.95
Premium Stop = $ 31.00

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