Don't Hit the DECK

With the overall market looking like it is at an intermediate term top, mini-revolutions sparking up all across the world, and oil prices pushing through the $100 per barrel level, you would be hard pressed to find a money manager that isn't buying up hedges and putting out some shorts. It is most important to do this when your long book consists of high-growth, make or break EPS names, such as Apple Inc. AAPL, Deckers Outdoor Corp. DECK, or Lululemon Athletica LULU. So, if you have been long names like these, you should be considering buying hedges that allow you to counter a market downturn. For example, if you have owned DECK for any length of time, you have gains that you would like to protect; consider this: Buying the April $80/75/70 put tree for a net debit of $0.45. This hedge gives you protection should shares test the 50-day moving average and fail. It also gets you re-long the name at a much better price point (around $65.55). Your max gain, or max hedge, occurs from $75-70, where the spread nets $4.55. 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.