With the market continuing to drop, I am recommending we roll our S&P 500 (SPX) put down again. And this time around, I am recommending we roll the spread lower as well.
If you are not currently in a hedged position, you can initiate one now by purchasing the lower-strike put or put spread. Just be aware that we will be tracking these as ongoing positions. Also, note that these are meant to be purely defensive. The goal is for them to expire worthless. They will only result in a profit if the market continues to sell off sharply.
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: 3,737.26
SPX Feb Monthly (2/19) 3125 Put
Net Debit: $14.95
Action:
- Sell to close the SPX Feb Monthly (2/19) 3125 Put for around $9.60
- Buy to open the SPX Feb Monthly (2/19) 3025 Put for around $7.15
- Set initial credit limit at $2.45
New Net Debit: $12.50
SPX Feb Monthly (2/19) 3225/3175 Put Spread
Cash in Hand: $2.45
Action:
- Sell to close the SPX Feb Monthly (2/19) 3225 Put for around $13.35
- Buy to close the SPX Feb Monthly (2/19) 3175 Put for around $11.25
- Set initial credit limit at $2.10
- Buy to open the SPX Feb Monthly (2/19) 3025 Put for around $7.15
- Sell to open the SPX Feb Monthly (2/19) 2975 Put for around $6.20
- Set initial debit limit at $0.95
New Cash in Hand: $3.60