TSC Options Forum: Turning Lemons Into Lemonade

What is your opinion about NetEase(NTES Quote)? I read the Aug. 12 story, "Net Stocks From China Showing Cracks," and any cracks just disappeared, as NTES recently broke out of the $52 resistance and is currently at about $58. I own 90 puts, 45 strike, December 2003 expiration at an average cost of $5.10. These are now down to $3. Also, what strategies would you recommend, to limit my losses? I'm hoping to get out at break-even or within a month of expiration, whichever is earlier. Thanks.

--S.H

I have no opinion of Chinese Internet stocks in general, or NetEase in particular. (Given the specificity of the question, I'm required to remind readers that I'm not a registered investment adviser.)

Also, since receiving this question two weeks ago, NetEase has traded as high as $69 and is currently back down to $52.33. Even though it's obviously a moving target, it still provides a real example for addressing some basic concepts on how to deal with an open options position that has moved into the loss column. ...