fuzzballl 12:41 pm on Wednesday, March 7, 2018
Tags: RocketManHedge ( 45 )

SPX

#RocketManHedge – Hedge is out to May but still gradually paying for it…

Bought to Close SPX MAR 7 2018 2700.0 Put @ .05 (sold for 7.75)

Sold SPX MAR 12 2018 2700.0 Put @ 9.00

MikeL 7:53 pm on Wednesday, March 7, 2018

Your long put is at 2640 and you are selling 2700 put.
So now you switched from a hedge to a credit spread.
Is that correct?
- fuzzballl 10:02 pm on Wednesday, March 7, 2018
  
  Guess it depends on how you look at it. My main goal is to cover the cost of the original long put position. When there’s a big rally in the market I will sometimes have to sell the short put above the strike of the long put. I’m not too worried about doing that since the puts are pretty easy to roll. If the market really starts selling off I’ll roll my short put way out in time and way down….even as much as 6 or nine months out and 200-300 points lower. By doing that the overall hedge will have fairly high negative deltas. Then I just wait for the selling to run it’s course and then close the whole position.
  
  Of course I wouldn’t make as much in a big selloff doing it this way but if the selloff never comes I’ll still be able to cover the cost of the long put position. I treat it like a free hedge.
  
  Click on the #RocketManHedge hash tag and you can scroll back and see how I played the Feb selloff with similar positions using synthetic short SPX hedges. I think this one will be easier to manage since it’s just strictly a long put.

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