It’s weeks like this when you’re happy to have a hedge on!
As the market plummeted on coronavirus-related fears, the value of our S&P 500 (SPX) positions has spiked.
We now have an opportunity to book some amazing profits — and we are going to take it.
However, I am also recommending we spend a bit of that cash to put new hedges in place at lower strikes. Whiles stocks are bouncing back a bit today, uncertainty abounds and turbulence in the bond market will continue to have an impact on equities.
If you are not currently in a hedged position and want to initiate one today, you can do so by opening one of the lower strike positions. Just be aware that we are tracking these as ongoing positions. And note that I am not recommending you double up on these hedges. Choose the one that best suits your trading style and hedging needs.
We discussed hedging at length in the SFPC Bonus Coaching Session. If you missed that session, please review it before attempting to put on a hedge.
Current Index Price: 3,151.16
SPX Mar Week Two (3/13) 3100 Put
Net Debit: $5.80
Action:
- Sell to close the SPX Mar Week Two (3/13) 3100 Put for around $50.25
- Buy to open the SPX Mar Week Two (3/13) 2850 Put for around $10.10
- Set your initial credit limit at $40.15
Cash in Hand: $34.35
SPX Mar Week Two (3/13) 3100/3050 Put Spread
Net Debit: $1.50
Action:
- Sell to close the SPX Mar Week Two (3/13) 3100 Put for around $50.25
- Buy to close the SPX Mar Week Two (3/13) 3050 Put for around $36.50
- Set initial credit limit at $13.75
- Buy to open the SPX Mar Week Two (3/13) 2900 Put for around $13.80
- Sell to open the SPX Mar Week Two (3/13) 2850 Put for around $10.10
- Set initial debit limit at $3.70
Cash in Hand: $8.55