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Berkshire Hathaway Inc. Message Board

  • axpkocop axpkocop Apr 27, 2012 10:29 AM Flag

    Deckers Outdoor Corp--DECK

    If you sell put options this is when you do it-DECK is down 24% today but it's down 60% from its 119 high last October.

    Sold put options in my IRA with a strike price of 42.5 that yield 5% and expire in September. If DECK should drop another 10% I'll sell more next week in another IRA.

    DECK should earn 4-5 dollars per share this year.

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    • I'm short call options now against DECK with a strike price of 52.5 in the month of April. My current net cost after selling options over the last year is under 37/share. So if my shares are called away next month, I'll have a gain of 42% in one year.

      DECK is currently trading at around 52.

      If my shares aren't called I'll be more aggressive selling call options against it for the remainder of the year with the goal of dropping my cost to under 32.

      I originally got involved in DECK because of their strong balance sheet-[$10/share in net cash] and the fact that they were earning over $4 per share.

    • DECK is down about 20% this week the very same week options expire. It looks like I'll be buying shares at 42.5 in my IRAs and possibly at 40 in my personal account.

    • Well done. There is a lot of time still left until September, but the timing of the sale was impeccable.

    • Interesting!

      If it's not protective put which involves buying a put option on shares that are simultaneously owned in the account, then IRS rules say you must have the necessary cash funds in the IRA account to pay for exercising the put until the put expires. The worst thing that can happen -- you lose the entire amount of the put's strike price. So on less your bet is fairly certain, it seems foolish to do this kind of trading within an IRA! Money you lose in an IRA account can't be replaced at will.

 
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