A Full Risk Hedge In Case Things Get Stupid Again

[Steven Place]

The SPX is at 1950, which is a level in which the “textbook case” would be resistance and the market will find sellers.

If you’re looking for downside hedges, I’m a big fan of put calendars.

Here’s what I’m putting on:

Buy to open SPY Sep/Oct 187 put calendar @0.90

Keep in mind… THIS IS A HEDGE

If I lose all the capital in this trade I will be OK with that because my longs will balance it out.

Heck if the SPY runs to 200 I may add at different strikes, similar to what we recently did in VXX.

If the market does selloff, you make money from the short deltas as well as the volatility that starts to pick up (again).

Full risk trade.

[Steven Place]

Welp. It wasn’t the best hedge in the world but I can get out for breakeven.

In hindsight, waiting for a further stretch OR adding another round of calendars would have turned this into a great trade.

Sell to close Oct 187 put for 1.00

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