Our most recent S&P 500 (SPX) hedges — the SPX Jan Week Four (1/22) 3450 Put and the SPX Jan Week Four (1/22) 3450/3400 Put Spread — are on track to expire worthless tomorrow, so I am recommending new defensive positions.
We will continue to track them as ongoing positions, but you can initiate one of these hedges even if you were not in a previous one. Just be aware that these are purely defensive positions. The goal is for them to expire worthless. They will only result in a profit is the market sells off sharply.
Note that I am recommending the far more liquid February monthly series as opposed to the February week three series, which expire on the same date. Call your broker if you need help getting into the right option.
If you are new to this kind of hedging, please check out my Coaching Session on Hedging Your Portfolio before making the trade.
Current Index Price: 3,835.64
Net Debit: $11.65
Action: Buy to open the SPX Feb Monthly (2/19) 3225 Put for around $5.80
New Net Debit: $17.45
SPX Bear Put Spread
Cash in Hand: $3.35
- Buy to open the SPX Feb Monthly (2/19) 3225 Put for around $5.80
- Sell to open the SPX Feb Monthly (2/19) 3175 Put for around $4.90
- Set initial debit limit at $0.90
New Cash in Hand: $2.45