I am taking a more selective approach to index hedging in an effort to reduce the cost and increase the effectiveness. Rather than remaining hedged at all times, I plan to put on hedges in anticipation of events that may disrupt the market.
I am recommending new hedges today — a S&P 500 (SPX) put option and a bear put spread –ahead of this week’s Federal Reserve meeting, which could be market moving. Please select the one that best matches your trading style and risk tolerance.
Be aware that these are meant to be purely defensive positions. The goal is for them to expire worthless. They will only result in a profit if the market sells off sharply.
If you are new to hedging, please check out my Coaching Session on Hedging Your Portfolio before making the trade.
Current Index Price: 4,236.91
SPX Put
Action: Buy to open SPX Jun Week Four (6/25) 4000 Put for around $5
SPX Bear Put Spread
Action:
- Buy to open SPX Jun Week Four (6/25) 4000 Put for around $5
- Sell to open SPX Jun Week Four (6/25) 3950 Put for around $3.85
- Set initial debit limit at $1.15
