JLJ002500

SUPN - Collar for protection

NASDAQ:SUPN   Supernus Pharmaceuticals, Inc
Bought SUPN at $5.65 as an investment, not a trade. In the past I have used collars to provide downside protection. Last collar expired last December. Collars should only be used in limited situation and timing them correctly is very important. It's only truly in hindsight that you can determine if the collar was a good decision. Last two collars worked out well. They cost me nothing and I didn't need to use them.

I felt the urge to put a new collar in place. Look at the wedge patterns on the chart (2 past and possible current formation). Could be a potential move down.

My limited order was executed. Sold a Sept $37 Call and bought the December $26 Put for .25 net credit. That's a pretty good credit especially considering SUPN would need more than 11% growth from current price for the Call to be in the money and expires 3 months before the Put protection.

If SUPN grows 20% in the next few months, I won't be looking at this decision so favorably.


Previous Collar - Expired in December 2016


Growth since last purchase