I want to continue hedging some of our positions with protective puts. This time I am recommending buying puts on our Best Buy (BBY) and SPDR S&P Biotech ETF (XBI), as well as our VanEck Vectors Semiconductor ETF (SMH) LEAP call spread.
Note that these puts are being purchased as hedges. Ideally, the market will go up and these puts will expire worthless. However, in the event the market sells off sharply, the purchased puts could explode in value. If that happens, we will look to pocket profits to help lower our cost basis on the positions and/or roll to lower strikes to keep our hedges in place.
BBY Jun Monthly (6/17) 80 Call
Current Stock Price: $70.11
Cost Basis: $95
Action: Buy to open the BBY Jun Monthly (6/17) 67.50 Put for around $0.86, but adjust as needed to buy a put today
New Cost Basis: $95.86
SMH Jan 2023 (1/20/23) 250/Jun Week Four (6/24) 245 Call Spread
Current Stock Price: $211.80
Cost Basis: $47.03
Action: Buy to open the SMH Jun Monthly (6/17) 205 Put for around $2.30, but adjust as needed to buy a put today
New Cost Basis: $49.33
XBI Jun Monthly (6/17) 70 Call
Current Stock Price: $63.04
Cost Basis: $91.21
Action: Buy to open the XBI Jun Monthly (6/17) 60 Put for around $0.80, but adjust as needed to buy a put today
New Cost Basis: $92.01