Our most recent S&P 500 (SPX) hedges — the SPX Nov Monthly (11/20) 2700 Put and the SPX Nov Monthly (11/20) 2700/2650 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.
We are going with a longer-dated hedge and a spread that is narrower than usual. This is due to my view of the market and a desire to reduce the cost of hedging. I plan to discuss my rationale in more depth in Tuesday’s Live Trading Session. (Register here.)
Note that I am recommending the more liquid December monthly series as opposed to the December 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: 3,559.32
Cash in Hand: $1.20
Action: Buy to open the SPX Dec Monthly (12/18) 3000 Put for around $5.90
New Net Debit: $4.70
SPX Bear Put Spread
Cash in Hand: $6.40
- Buy to open the SPX Dec Monthly (12/18) 3000 Put for around $5.90
- Sell to open the SPX Dec Monthly (12/18) 2975 Put for around $5.30
- Set initial debit limit at $0.60
New Cash in Hand: $5.80