The long put trade on TransCanada (TSX: TRP, NYSE: TRP) that we recommended in September worked well, delivering a profit of 47% in 3 days —but admittedly, you had to be nimble to capture the profit.

Although we have not quite given up on our July TransCanada trade, it looks likely that we are going to incur our first options trading loss on the long put on TransCanada that expires on October 21. We still think that our thesis is correct: TRP had a huge price increase over the past few months and made a large, expensive acquisition leaving the share vulnerable to a price correction. On the other hand, higher oil and gas prices are supporting the share price, resulting in a sideways moving share price rather than the outright decline that we expected.

For October, we suggest two trades aimed at protecting large gains on two of our more recent inclusions in the Dividend Champions portfolio. Please note that these two trades are not intended for speculative trading but for investors who followed our advice and wish to protect their gains.

Flying Too High?

Investment thesis: CAE Inc. (TSX: CAE, NYSE: CAE), the provider of flight simulation and training services to commercial and defence force clients, has done well since we first recommended the stock in in July and has gained almost 40% since the February low. Although the stock is not overly expensive compared to its peers, we feel that it would prudent to use some of our profits to protect against downside risk.

Option Strategy: Buy to open a protective put option with a strike price of C$18 with expiry on 18 November 2016 at or below C$20 per option (C$0.20 x 100). This is intended for shareholders of CAE that wish to protect their holdings against downside risk.

Steady Now!

Investment thesis: TMX Group (TSX: X, OTC: TMXXF), the owner and operator of major trading exchanges in Canada, has been on a tear since we first recommended the stock in January and has now gained more than 60% since that time. Although the stock is still less expensive than its global peers, we feel that it would prudent to take out some insurance to protect against downside risk.

Option Strategy: Buy to open a protective put option with a strike price of C$60 with expiry on 18 November 2016 at or below C$95 per option (C$0.95 x 100). This is intended for shareholders of TMX that wish to protect their holdings against downside risk.