I'm currently involved in an agreement that cannot be terminated early.
The terms are simple:
* If **Nike (NKE)** closes **below $40 on the last trading day of this year**, I will be required to **buy 2,000 shares at $60 per share**.
* If NKE closes at or above $40, nothing happens.
When I entered into this agreement, I did not expect NKE to decline this much. However, with the stock currently trading around **$39**, there is now a real possibility that I will have to purchase 2,000 shares at a price significantly above the market price.
I'm hoping to get some insights from experienced traders:
1. Should I start hedging this risk now?
2. What would be the most cost-effective way to hedge this type of exposure?
3. Are there any options strategies or other approaches that could reduce downside risk while still keeping some upside potential if NKE rebounds?
I'd like to learn how experienced traders would handle this situation and manage the risk.
I'd also like to learn whether experienced traders would typically use options strategies when entering into this type of agreement to hedge the risk and potentially improve the overall outcome.
**Any thoughts, ideas, or risk management strategies from experienced traders would be greatly appreciated. Thanks!**