08-20-2013, 09:10 PM
With the current environment and the shorts giving it all they've got, they may succeed in driving the price down a little lower, who knows maybe a lot. The question is, how to lock in your profit from the protective puts you may have recently purchased, yet still be protected in the event there is more downside than anticipated. Using the sept 60 puts as an example, they were purchased last week for around 1.50. They are currently trading for $4.20. If the pps drops another $5 today, you could sell them for $6.75. Immediately buy the 50s for $2.45, locking in a profit of $2.80 ($6.75-$1.50-$2.45)and still have some protection just in case there is a huge sink hole that swallows up Elk and Antelope.