Should You Hit the DECK?

Deckers Outdoor Corporation DECK is set to report Q3 earnings after the bell today; shares are currently off by 1.24%, trading at $54.05. For a full earnings preview including earnings estimates, volatility expectations, and technical break down, please click here. With shares having run so much this year, it would be imprudent not to consider hedging your long stock position into earnings, especially given the expected movement in the name of nearly 12%. Here are two ways to get a little protection in the release: • Sell the November $45.00/55.00 strangle for $3.30. This gives you a 6.11% hedge to the downside, effectively getting re-long at the 50-day moving average and then longer at the 200-day moving average. With this trade you retain roughly 8% upside over the November contract cycle. • Collar up the position, selling the Nov $60.00 call to buy the Nov $50.00 put for a net debit of $0.40. This trade retains 11.11% upside while giving you a hard hedge to your long position at $50.00, roughly 7.4% lower than the current trade price. Deckers Outdoor Corporation is engaged in designing, producing, marketing and brand managing of footwear and accessories. The company sells its products, including accessories, such as handbags, headwear, packs and outerwear, through domestic retailers and international distributors and directly to the consumers, both domestically and internationally, through its Websites, call centers, retail concept stores and retail outlet stores. The company markets its products under three brands: UGG, Teva and Simple. The company acquired 100% of the ownership interest of Ahnu, Inc. in March 2009.