XpresSpa Group Inc (XSPA)

[xlt leader]

You can verify Group ONe's strategy here:

http://whalewisdom.com/stock/vrng#

Most likely it is a collar strategy where they are long puts and selling call options. It's hard to know the strikes and months used but it is definitely a hedge strategy. My explanation was in error but the strategy is most likely a collar.

This is what I think they executed:

The investor writes a call option and buys a put option with the same expiration, as a means to hedge a long position in the underlying stock. You could say that this strategy combines two other hedging strategies: protective puts and covered call writing.

Usually, the investor will select a call strike above, and a long put strike below, the starting stock price. There is latitude, but the strike choices will affect the cost of the hedge as well as the protection it provides. These strikes are referred to as the 'floor' and the 'ceiling' of the position, and the stock is 'collared' between the two strikes.

The put strike establishes a minimum exit price, should the investor need to liquidate in a downturn.

The call strike sets an upper limit on stock gains. The investor should be prepared to relinquish the shares if the stock rallies above the call strike.

Summary

The investor adds a collar to an existing long stock position as a temporary, slightly less-than-complete hedge against the effects of a possible near-term decline. The long put strike provides a minimum selling price for the stock, and the short call strike sets a maximum price. (For a short stock position, a long call could be combined with a short put.)

BTW I calculated they entered this position with an average stock price of $2.87