Our most recent S&P 500 (SPX) hedges — the SPX May Monthly (5/21) 3650 Put and the SPX May Monthly (5/21) 3650/3600 Put Spread — are on track to expire worthless, so I am recommending new defensive positions today.
The new hedges are two weeks out as opposed to June monthly positions. Given current market volatility, this may create a better opportunity for us to roll and reduce our cost basis sometime in the next two weeks.
We will continue to track these as ongoing positions, but you can initiate one of these hedges even if you were not in a previous one.
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 this kind of hedging, please check out my Coaching Session on Hedging Your Portfolio before making the trade.
Current Index Price: 4,173.70
Net Debit: $26.65
Action: Buy to open the SPX Jun Week One (6/4) 3850 Put for around $6.15
New Net Debit: $32.80
SPX Bear Put Spread
Cash in Hand: $1.80
- Buy to open the SPX Jun Week One (6/4) 3850 Put for around $6.15
- Sell to open the SPX Jun Week One (6/4) 3800 Put for around $4.80
- Set initial debit limit at $1.35
New Cash in Hand: $0.45