Accredited Investing Education

Monsanto (MON) stock slide over? Goldman Sachs (GS) thinks so. Thank you Collar trade (again!)

On May 10th I blogged about how my stock position in MON could be in trouble. I had purchased some MON stock for about $66-$67 per share and as of yesterday MON was trading as low as $48 per share.

If I had NOT used options to manage risk in this trade (the worst stock trade for me in 2010) I would have lost thousands of dollars by now. Following the adjustment process that I learned here as a student I have made some adjustments to my stock position. These adjustments have allowed me to prevent major losses as MON fell. Today, there is some hope that MON could rise again as Goldman Sachs (GS) put this stock on their conviction buy list. I have closed my put options in the collar trade today which allowed me to capture premium and lower my cost basis in the MON stock.

Barron’s online agrees with Goldmans call on MON and says that the stock is oversold fundamentally. Whether or not MON finds a bottom here only time will tell. This is the genius of our trading process. We don’t need to know where MON will go tomorrow.

I don’t know which direction MON will take from here but I do understand what I need to do whether it moves higher or lower from here. If you are reading this and don’t know how to manage the risk if a stock goes against you, please get in touch with us. Learning to be a good risk manager is an absolute necessity, and no one teaches it better than us.

Charan Singh

OptionsANIMAL Instructor