#hedge Thanks for all the…


Thanks for all the ideas below. I gave this some thought while mowing the lawn, push mower, ear plugs in, so I tend to think trading issues over while I am doing it and have about 1.25 hours to do that every week because it keeps raining and my grass keeps growing. Most years it is brown by now and I take a few weeks off mowing. Some of my best ideas have popped in my head while mowing but also some of my dumbest (no you really shouldn’t build a mini plane using a lawnmower engine, well you can but does not make it a smart idea and you would likely end up making a flaming hole in the ground).

So here are the best options I can figure out.
1. Straight SPX/SPY put purchase. Most months will lose almost all of it. Have to adjust as the market moves. If your hedge was set up at 2700 and the SPX is now 2800 your hedge will not cover as well as it did when you put it on. Maybe 1-2 times a year pays out decently, once every 15 months is a lottery ticket. Can sell other options to pay for it but bottom line is you are buying insurance and we all know how that usually works out. Can roll it to at least recover a little of the premium you paid. This is what I put on Friday.


2. Risk twist. Cheaper than above good downside protection but leaves a gap at expiration where max loss can still occur. Same issue as above, needs to be adjusted as the market moves but starting 90 DTE gives you more time and less expensive even if doing 4 times a year. I suspect the payouts are about the same as straight puts since you are long puts on a ratio. Switched to SPY for example. 3 long, 2 short ratio with a 10 point spread. Similar to a back ratio or a modified butterfly.


3. Credit spread on SPY or SPX or /ES but you have to act quickly on adjusting. Say you sold the SPX delta 16 put and then bought an option 10 points below. For example sell 10 the 2600 and buy the 2590. If the delta on the short makes it to a delta 30 you would buy 3-5 of 2595 puts to effectively create a back ratio. No graph, we have discussed this as an adjustment in the #spycraft discussion. The only issue with this is you have to act quickly sometimes and occasionally the move is in the middle of the night like on 8/24/2015. The /ES was down 300 points when I woke up and any adjustment then was limiting losses, not making more $. At that point it was going to be painful no matter what I did. I suppose if you traded /ES you could adjust it in the middle of the night or even SPY and SPX now. The big advantage here is you take in a credit when you put the trade on so buying options could be taken out of the credit. On a big move buying extra options will cost more though. Likely would only have to adjust 2 times a year and you could also ladder and start 45 DTE to make the most of theta decay until the move happens. You also need to leave enough room between the strikes so that you can buy in between. The others are set and forget for a while, this one would need checking every day like any sold option. Most of us here do that anyway.

4. Front spread/back spread or back ratio depending on your vocabulary or possibly a #rocketmanhedge here?
On SPY assuming a 10% correction which I did with all of these, you sell one 265 put and buy two 260 puts for $175 debit. The debit on the risk twist above would be $219 for a similar looking graph. Also keep in the mind the straight put purchase is for 30 DTE, the risk twist and the back ratio are set up for 90 days and the credit spread at 45 DTE. So there are some timing differences and the time component would need to be managed on all of them. Front spread is buy one sell 2 so really would not help in this case, unless it was a call spread and set up for a credit. Then in a correction you would keep the credit.


So the winner is? Up to you. I suppose it depends on what you want. Lottery ticket go with straight puts but most months like a lottery ticket you will lose your money. The risk twist and the back ratio decrease the cost but still need a really big move to pay off. Advantage is you can get another 2 months out of them for a cheaper cost than the monthlies but in either case as the market moves would need to be adjusted. A 10% correction from 2800 is going to be a lot different strikes than a 10% correction from 2600 on SPX.

Finally we have the credit spread converted to a back ratio. Paid up front, theta helps you, but on those 5 standard deviation moves might not have time to pull the trigger at the right moment. But at least you are then risk defined and can probably roll until the market settles down. I was able to do that with a few of my accounts on 8/24/15 and actually broke even after about 3-4 weeks. Still there was a lot of red on the screen until then. Also the markets became really wide and it was hard to get decent fills. TS and TOS did ok with it, optionsxpress and fidelity not so much and is why I do not have accounts there anymore.

My personal vote is probably the back ratio or a credit spread adjusted to a back ratio early. Cheaper than a straight put purchase, longer acting, but still pays out the lottery ticket when needed and simpler than a risk/twist, less moving parts.

Floor open for discussion. Anyone have any other or better ideas please let me know 🙂

I am at the point in my trading career and my accounts are big enough a few of them need insurance most of the time. I plan to do these going forward and will report on what is the best cost/benefit ratio.


#RocketManhedge – I’m officially retiring this experimental hashtag with good news and bad news. First the bad news…

Was out yesterday and missed my chance to roll out and down my short weekly so the hedge didn’t do any good at all…it was actually down yesterday. So today I closed the whole thing at a loss since it’s not working and is really getting me sidetracked watching other positions.

Did 4 of these in total with 3 winners and one loser but still a net loss of 28 points…

Now, the good news. With my accounts being more heavily weighted in synthetics I’ve found the big overall hedge isn’t really needed since most of these positions have the hedges already built in. It’s really been noticeable during these 2 recent selloffs we’ve had. More good news is the fact Sue mentioned TheoTrade the other day so I’ve been getting his free videos. Came across this one that I really liked and will be putting these on from now on when the market is getting to extremes. I’m also wondering if something similar would work to the long side as well…haven’t even checked and have no idea since that just crossed my mind while typing this…LOL


#RocketManHedge – Rolling my short weekly out and down to Friday. Hedge is out in May so might have to keep easing it down for now…

Rolled SPX MAR 19 2018 2750.0 Put to SPX MAR 23 2018 2740.0 Put @ 2.00 credit


#RocketManHedge – Booking the short put and leaving the long un-hedged over the weekend…

Bought to Close SPX MAR 12 2018 2700.0 Put @ .35 (sold for 9.00)


#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


#RocketManHedge – Not much fun having these now but in a selloff they’re awesome…killing time for now with safe sales.

Bought to Close SPX MAR 2 2018 2640.0 Put @ .85 (sold for 11.40)

Sold SPX MAR 7 2018 2700.0 Put @ 7.75


#RocketManHedge – Still leaving plenty of downside room…core position is a May 2640 long put…

Bought to Close SPX FEB 23 2018 2575.0 Put @ 1.40 (sold for 7.25)

Sold SPX MAR 2 2018 2640.0 Put @ 11.40


#RocketManHedge – Leaving plenty of downside protection while still collecting enough premium to cover the cost of the hedge…

Bought to Close SPX FEB 20 2018 2540.0 Put @ 1.85 (sold for 14.10)

Sold SPX FEB 23 2018 2575.0 Put @ 7.25

SPX new hedge

#RocketManHedge – A new one out to May with a more traditional put buy / sell against…

Bought SPX MAY 18 2018 2640.0 Put @ 101.20

14 weeks to run so need 7.25 to cover it. As of right now with this volatility that strike is 185 points out of the money. Not gonna give it quite that much room!


Sold SPX FEB 20 2018 2540.0 Put @ 14.10

For fun here’s the metrics on that particular put sale:

Short delta down to 2475. At that point the profit would be 27 points. That’s six percent lower from here. Will definitely help with the longs if we roll over…

SPX complete reset…

#RocketManHedge – Had two of these running…one that had become long deltas on the selloff and one where I had rolled the weekly sale out to Dec to give it room. Clearing both out with profits and starting fresh in May with long puts only and a conservative weekly sale against. Put premium is up but it works both ways. Weekly sales are juicy allowing more downside room to run…

Hedge #1

Closed March 2670/2670/2675 synthetic short
Closed March 2725 put (that was the big profit blocker)

Collected a lot of weekly premium and all said and done made 20 points

Hedge #2

Closed April 2800/2800/2810 synthetic short
Closed Dec 2500 put (too slow to get it out of the way or could’ve been big)

Collected a lot of weekly premium and all said and done made 17 points

Kinda disappointed in how I traded it but still winners…


#RocketManHedge – Let’s see if this works…rolling my weekly out to end of year and low as possible. Let the hedge ride as long as we are below the 50ma. When it recovers above the 50ma book the big profit on the hedge and start selling calls against the short LEAP put. Position size is what allows this…April hedge is up 85 points with the weekly cleared out…

Rolled this week’s short put to SPX DEC 31 2018 2500.0 Put @ 2.20 credit


#RocketManHedge – Easing the weekly down for now picking up another 6.40 of downside…

Rolled SPX FEB 2 2018 2820.0 Put to FEB 7 2018 2815.0 Put @ 1.40 credit


#RocketManHedge – Great market for these…double dip selling Friday.

Bought to Close SPX JAN 31 2018 2820.0 Put @ 0.30 (sold for 5.00)

Sold SPX FEB 2 2018 2820.0 Put @ 7.00


#RocketManHedge – Posting from seat 14F somewhere above and slightly west of @Iceman … 🙂

This sale insures a breakeven on my March hedge….still may eventually roll it around a little more to possibly make a buck or two…

Bought to Close SPX JAN 31 2018 2750.0 Put @ .30 (sold for 3.70)

Sold SPX MAR 16 2018 2725.0 Put @ 13.50


#RocketManHedge -My further out #FuzzyBear hedge at 2800 I can be more aggressive with now…

Rolled Wed 2785 put to Fri 2800 @ 4.25 credit (12.25 total received on it now)


#RocketManHedge -Let this one spend the weekend unhedged but since the world doesn’t seem to be ending with the gubment shutdown I’m covering it now…

Sold SPX JAN 31 2018 2750.0 Put @ 3.70

SPX March Hedge

#RocketManHedge -Last put sale was aggressive and open to a lot of whipsaw risk so closing it until after the shutdown gets resolved. Plenty of time to re-sell next week and still get out of the overall hedge in the green.

Bought to Close SPX JAN 19 2018 2790.0 Put @ 4.10 (sold for 9.70)

SPX hedge through April

With my current #RocketManHedge looking like it has a good chance of turning a decent profit ( in spite of moving against me from almost the first day) I’m adding another out about 90 days.

#SyntheticShort out through April expiration…

Synthetic short stock with a protective call. 49.00 debit with max loss of 59.00:

Sold SPX APR 20 2018 2800.0 Call @ 57.55
Bought SPX APR 20 2018 2800.0 Put @ 54.90
Bought SPX APR 20 2018 2810.0 Call @ 51.65

With 13 weeks for the trade to run need to collect 4.55 per week to cover the max loss so:

Sold SPX JAN 24 2018 2785.0 Put @ 8.00


#RocketManHedge – Been selling aggressively against this one so almost back to even with 2 more months to run. Rolling aggressively here to see if 2800 is new support.

Rolled SPX JAN 19 2018 2750.0 Put to SPX JAN 19 2018 2790.0 Put @ 4.00 credit.

Position is now 38.00 premium received against a 54 max loss position. Only need about 2.00 per week going forward to break even on what turned out to be a useless hedge…


#RocketManHedge – Core position in March…selling against it.

Bought to Close SPX JAN 10 2018 2700.0 Put @ .35 (sold for 11.70 net after a roll up)

Sold SPX JAN 17 2018 2725.0 Put @ 5.00


#RocketManHedge – This was the first one I tried as an experiment. Went synthetic short for this one using Jan monthly. Never moved in my favor from the very first day. Just closed the synthetic short position at max loss of 50 points. But…weekly put sales brought in a surprising 56.3 points.

Completely out of it now with a 6.30 winner. Similar trade in March that will hopefully turn out ok. It hasn’t exactly been moving in my favor either…LOL


#RocketManHedge – Still chipping away at this since it looks like the Rocket Man will become a powerful and respected leader throughout civilization… 🙂 🙂

Rolled SPX JAN 10 2018 2660.0 Put to JAN 10 2018 2700.0 Put @ 5.20 credit

Letting my Jan hedge run to expiration with about a 6 point profit…


#RocketManHedge – Watching John Carter’s free video last night…he’s expecting a massive rotation after the first of the year and throwing around downside numbers like 2550 (of course he was super bullish on GLD at 123 around Thanksgiving 🙂 ). Just in case this prediction is a little better I’m giving my hedges a little more room. Booked my last aggressive put sale right at the open today and re-selling a little lower.

Bought to Close SPX DEC 29 2017 2695.0 Put @ 8.50 (sold for 12.10)

Sold SPX JAN 10 2018 2660.0 Put @ 6.50


#RocketManHedge – Final sale on the Jan hedge. Going out to where the short 2570 position is and selling just under it locking in the gains. Could be more though with a pullback below 2575.

Sold to Open SPX JAN 19 2018 2565.0 Put @ 3.60

Max loss was 50 points with total premium received of 56.30…


#RocketManHedge – This should get us the pullback we need… #TakeOneForTheTeam … since my ITM SVXY put spreads aren’t helping let’s try something new. Selling against my March hedge.

Bought to Close SPX DEC 22 2017 2670.0 Put @ .95 (sold for 9.20)

Sold SPX DEC 29 2017 2695.0 Put @ 12.10

EDIT…ITM SVXY put spreads…


#RocketManHedge – This was sold against my Jan hedge. Max loss more than covered now. Waiting on some weakness for one last sale…

Bought to Close SPX DEC 22 2017 2640.0 Put @ .20 (sold for 3.70)

SPX hedge in March

#RocketManHedge – Moving from Monday out and up to next Friday. New sale is aggressive at the same strike as my synthetic short…

Bought to Close SPX DEC 18 2017 2650.0 Put @ .85 (sold for 5.40)

Sold SPX DEC 22 2017 2670.0 Put @ 9.20


#RocketManHedge #FuzzyBear – This is my first one that expires in Jan. Gradually scaling back to slightly more conservative selling. Moving this from next Monday to Friday…

Bought to Close SPX DEC 18 2017 2625.0 Put @ .50 (sold for 5.40)
Sold SPX DEC 22 2017 2640.0 Put @ 3.70

Original position sitting at max loss of 50 points. Total premium received is now 57.70 with another month to run…

SPX hedge through March

With my current #RocketManHedge looking like it has a good chance of turning a decent profit ( in spite of moving against me from almost the first day) I’m adding another out about 90 days. This one is slightly more expensive since I’m setting up a little above the market but giving it a couple extra weeks to make up the difference.

#SyntheticShort -A little hedge out through March expiration…

Synthetic short stock with a protective call. 49.00 debit with max loss of 54.00:

Sold SPX MAR 16 2018 2670.0 Call @ 46.23
Bought SPX MAR 16 2018 2670.0 Put @ 51.97
Bought SPX MAR 16 2018 2675.0 Call @ 43.26

Need to collect 4.15 per week to cover the max loss so:

Sold SPX DEC 18 2017 2650.0 Put @ 5.40

Selling Monday and then looking to double up on the following Friday…


12/8 Happy Friday

1. NVDA: Fully closed the #JadeLizard sold for 3.62, partial cover at 1.62 yesterday, rest covered today at 1.35
2. BA: Closed the contrarian BePS, closed for .66 shy of full loss. Prob of touch is still high enough I should have held, but it’s just continuing to be a train.
3. LRCX: Closed the #PutRatioSpread for over 50% gain, 1.45, $1555.00. Recovery mission on big loss last week.
4. MSFT: #Bitty closed for 50%, this was Jan 80/75 BuPS for .82 cr, covered .41
5. SPX : I’m kind of thinking we see a strong market into next week’s expiration, so rolled the short puts on the #RocketManHedge from 2605 to 2625. Realized $2820 in the roll.
6. SPY: Opened #SpikedLizard for January. Part 1: 264/265/267 for 3.74 cr Part 2 (spike) 260/253 ratio put spread for .05. No upside risk, downside BE is 253 due to the spike. Need SPY price above $260 for meaningful profit. 50% target. I’d like to ladder these every 2 weeks.
7. SPX: Opened 7DTE #Bitty I said I didn’t want to do 7DTE Bitties any more, but betting we see an upside into next week’s expiration. Of course I could be all wrong. Got more credit than usual on these. Dec 15 2630/2625 BuPS for average price of .875 credit, 50% target
8. TXN: Opened BuPS for January 97.5/95 for .72, 50% target
9. TJX: Continued defense. Sold Dec 15 calls to adjust deltas
10. MU: Opened #EarningsRunUp trade based on historical backtesting. Partial position. Dec 22 47.5 call for 1.04.
11. PIR: Closed #EarningsRunUp trade for 28% profit, bought at .35, sold at .45
12. ABBV: Opened #BuPS for January 92.5/90 for .56, target 50%
13. FLIR: Opened #SyntheticCoveredCall for January 47 puts for 1.40, very high historical win rate on short puts for this company
14. BBY: Closed the contrarian BePS for loss, salvaging .60 from max loss
15. AAPL: I already have a BuPS on for next week, used this little upswing today to sell calls converting it to an #IronButterfly.


#RocketManHedge – Booking and selling…this sale completes the covering of max loss on the hedge with another month to run. After this I’ll start giving it a little more downside room. Make a little but keep a strong hedge though Jan expiration.

Skipping Friday since it only trades thru Thursday close. Selling the following Monday instead.

Bought to Close SPX DEC 8 2017 2625.0 Put @ .15 (sold for 7.10)

Sold SPX DEC 18 2017 2625.0 Put @ 5.40

Opening trades:

SPX: #rocketmanhedge thank you @fuzzballl Feb +2635 put, -2635c, +2640c for 40.15 net, -Dec 2605p for $5.40, Basis = 34.62.
COT: Last month there was a day with 4 large block trades totaling over 4 million in shares. It sparked a lot of call activity. I’ve been waiting for closer to 13f releases for Dec to see if call activity picks up again, it sure did today, so I have a little spec play on for COT for next week. 17.5 calls for .34
MAR: #JadeLizard for next week Dec -126p/-130c/+132 c for 1.21 net cr, 50% target
TJX: Added #BECS to #BUPS to convert to iron fly for defense

Closing Trades:
BA #Bitty Closed at 50% target, sold at .50, bought at .25
TTWO #BUCS Bought 2.65 sold 3.10 net .45/contract
FB #shortputs covered for 50% Sold at 1.10, covered at .55
NVDA #JadeLizard from last week is beginning to cover for 50% Sold 185/205/207.5 for 3.62, cover order is partially filled at 1.62

Dec 6th Trades

Pretty quiet trading day for me, thanks again for everyone’s good ideas:

1. Took the HD BePS profit I was expecting this morning (Bought 1.09, sold 1.59)
2. Bought PIR long calls for Earnings run up (closes 1 day before earnings), target 40%
3. SHAK BePS for retracement from extreme up move, .84 debit, target 50%, trade is green
4. BA BePS for retracement from extreme up move, 1.21 debit, 50% target, trade is red
5. ADSK #ShortPuts for Mar, thank you for the idea @jsd501
6. I’m keeping 2 short /ES contracts hedged with short puts, rolled short puts to next week for additional credit. This “Z” contract will run out pretty soon.
7. CVX closed BuCS for 50% loss (I’m testing using “probability of touch” as a stop on debit trades)
8. RCII There was an almost 10,000 contract opening call sale today for Jan 13 calls, so I bought a BePS Jan 13/11 for 1.14 (paid less than intrinsic). Following the “smart money” fund flow on this (I realize this may be Trader setting a hedge vs a spec trade, but it’s limited risk)
9. New NDX #Bitty Dec 29 6125/6120 for .85 cr, 50% target

Active Reds: AAPL, ALGN, DLTR, JPM, LMT, NUE, PIR, QQQ, SPY, ULTA, /ES, BA (net green)

3% return on capital today

#hedge, #rocketmanhedge, #syntheticshort


#RocketManHedge – This has been kind of a fun/interesting trade/experiment. Originally put on synthetic short stock with a disaster call for 45.0 debit with max loss of 50.0 out in Jan 2018 monthly. Had enough time to sell about 4 points a week to cover max loss and still constantly carry about a 40 point downside hedge.

With the rally I’ve been selling much more aggressively and have already recovered all but about 12 points of the max loss and still have 6 weeks to run. Looks like the hedge will still be nicely profitable even though the market has gone completely against it. I’ll still sell aggressively with the plan to roll the short put out and down if we implode.

I’m happy enough with this type of hedge I may do it in slightly bigger size next time…

Bought to Close SPX DEC 1 2017 2600.0 Put @ .25 (sold for 10.50)

Sold SPX DEC 8 2017 2625.0 Put @ 7.10

For as strong as /NQ…

For as strong as /NQ is today, many stocks having pretty weak bounce. $FB, $SQ, $NFLX, $TSLA, $GOOGL etc… $AAPL and $MSFT seem to be doing the heavy lifting today.


SPX hedge

Hindsight is 20/20 of course…don’t need the #RocketManHedge (yet 🙂 ). I will continue selling aggressively against it to turn it into a profitable position anyway. I’ll roll this new sale down if needed but it’s bordering on a #TakeOneForTheTeam !

Bought to Close SPX NOV 24 2017 2575.0 Put @ .65 (sold for 4.95)

Sold SPX DEC 1 2017 2600.0 Put @ 10.50


#RocketManHedge – A little adjustment on the pullback. Doesn’t look like we’re going to crash so focusing now on collecting more premium than the max loss on the hedge. Should still make some scratch up or down while still helping on the pullbacks.

Bought to Close SPX NOV 20 2017 2565.0 Put @ .95 (sold for 8.00 two days ago)

Sold SPX NOV 24 2017 2575.0 Put @ 4.95

Max loss on the original hedge was 50 points if above 2575. Already cut that down to 22 points in 3 weeks with 8 more weeks to run. Sell a little at a time and still carry some downside help…


#RocketManHedge – Extra volatility allowing two sales per week for now. Selling against Jan monthly synthetic short. Looks like I’ll more than cover max loss with any selloff being really nice profit.

Bought to Close SPX NOV 15 2017 2565.0 Put @ .30 (sold for 5.70 last Friday)

Sold SPX (Monday) NOV 20 2017 2565.0 Put @ 8.00 (will roll down if we implode)

Good morning

According to zero hedge, Denis Gartman thinks the bear market is upon us. If true to form, we should buy the dip.


SPX hedge

#RocketManHedge – Synthetic short out in January. Gradually covering the cost (and a little more) while carrying a little downside protection. Going out to next Wed here since the Friday monthlies only trade until Thur at the close.

This week’s 2560 looks safe so:

Sold SPX NOV 15 2017 2565.0 Put @ 5.70

Fuzzy, need a hand..


Fuzzy, I need your help on what and how you do with options on futures…


SPX hedge

#RocketManHedge – Only need to collect 4.15 per week to carry this as a free hedge…this week’s looks safe so selling next week. So far it’s looking like carrying a short SPX position out to Jan expiry might actually turn a profit with market up or down (down would be better 🙂 )

Sold SPX NOV 10 2017 2560.0 Put @ 5.20

Selling against synthetic short in January…

SPY hedge

#RocketManHedge – Moving my position over to SPX so selling puts against the SPY hedge experiment to get to even…

Sold SPY NOV 3 2017 253.0 Puts @ .62

SPX hedge thru Jan expiry

#SyntheticShort #Hedge #RocketManHedge – A little hedge out through the beginning of the year…

Synthetic short stock with a protective call. 45.00 debit with max loss of 50.00:

Sold SPX JAN 19 2018 2570.0 Call @ 41.50
Bought SPX JAN 19 2018 2570.0 Put @ 48.00
Bought SPX JAN 19 2018 2575.0 Call @ 38.50

Need to collect 4.15 per week to cover the max loss so:

Sold SPX NOV 3 2017 2530.0 Put @ 5.90

This gives 40 to 50 points of downside protection for minimal (or no) cost…

SPY hedge

#RocketManHedge – Been thinking about this for awhile. Having a great year with account at all time highs. Don’t really want anything crazy to mess up a good year so I’ve been looking at some hedges out towards end of year. Looked at SPX, /ES, VIX, and SPY.

Finally decided on SPY with a synthetic short with defined risk to the upside and protection all the way to zero. It was then just a matter of how much insurance to get. I’m already hedged on a lot of my stuff but there is still some risk there if Rocket Man pulls anything crazy.

Here’s the details:

Sell to Open 2 SPY DEC 15 2017 253.0 Calls @ 4.28
Buy to Open 2 SPY DEC 15 2017 253.0 Puts @ 4.24

Then to cap upside risk:

Buy to Open SPY DEC 15 2017 254.0 Calls @ 3.65

Cost of trade $722 with max loss of $922
Max gain of $49,878 (protection to zero)

Breakeven of SPY 249.39

Questions, comments, criticisms always welcome!

#longputspread, #rocketman