With the $VIX resting near 52-week lows and options cheap, it only makes sense to add OTM put debit spreads to hedge our long exposure.
We prefer to use $SPX cash-settled index options to do so. It’s very straight forward: if a big event unfolds and the markets reverse course, the put spreads will help to offset the losses in our long positions.
The 1270/1260 March put spread can be purchased for $1.10 and offers up to $8.90 return if the market were to correct between now and March expiration. It’s almost a no brainer- hedge some of your longs for $110.
Trade Idea:
BUY +1 VERTICAL SPX 100 MAR 11 1270/1260 PUT @1.10 LMT
Trade Details:
Type: Bear Put Spread
Expiration Month: March
Breakeven Level(s): SPX 1,268.90
Maximum Gains: $890
Profit Taking Level: $500
Maximum Loss(es): -$110
Stop Loss: None