FullyInformed.com

SPY PUT Options Held Overnight Can End With Unexpected Losses

Jun 26, 2012 | SPY ETF Hedge Strategy (SPY)

Today’s market direction stayed positive and tried hard to rally. But this was to be expected after such a heavy down day on Monday and I was waiting to purchase spy put options to hedge my portfolio going into Wednesday and Thursday.

My market timing analysis from Monday after the markets closed showed the possibility of a rally and then once again more selling. That meant a rally for Tuesday which is what happened today and then more selling into the rest of the week.

SPY PUT OPTIONS Purchased

With my market timing analysis in mind I watched for a strong overbought indication in the Ultimate Oscillator all day to buy spy put options.

You can see in the chart below there were two overbought signals but neither were extreme. As the market was climbing and as I needed to purchase as high as possible, it was prudent to wait for an extreme overbought reading.

I got the reading around 2:30. I missed the top but purchased my spy put options as the S&P pulled back.

The chart below shows the day’s activities. You can see how much more extreme the Ultimate Oscillator overbought reading was when I purchased my spy put options than at any other time during today.

Spy Put Options Bought

SPY PUT Options Could Be A Wrong Trade

Despite my market timing analysis indicating that selling will continue in stocks after today, there is always room for error. Something positive could come out of Europe or an economic report on Wednesday could surprise to the upside.

That is the chance taken when buying spy put options to hold overnight. I prefer to buy my spy put options when the market direction is already moving lower. I then wait for a bounce and buy to profit as the market continues moving lower during the day.

But buying spy put options a day in advance has distinct advantages including a better chance of a larger profit should the market gap down at the open.

The spy put options trade is my method of hedging and with today’s rise in the market I bought at a prime moment which hedges my portfolio fairly well for Wednesday’s market.

If the market turns up and shows strength I can always sell my spy put options for a small loss since I have built up a consider cash cushion already.

SEARCH

Select to view all results...

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors

Related Articles

Spy ETF Hedge Trades And Intraday Market Updates For Wed Mar 27 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Wed Mar 27 2024 following another negative close on Tuesday. The support and resistance levels are updated after Tuesday’s close.. I take profits as they appear, as markets are …

Spy ETF Hedge Trades And Intraday Market Updates For Tue Mar 26 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Tue Mar 26 2024 following a slight negative close on Monday. The support and resistance levels are unchanged for Tuesday. I take profits as they appear, as markets are …

Spy ETF Hedge Trades And Intraday Market Updates For Mon Mar 25 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Mon Mar 25 2024 following a slight negative close on Friday. The support and resistance levels have also been updated. I take profits as they appear, as markets are …

Spy ETF Hedge Trades And Intraday Market Updates For Fri Mar 22 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Fri Mar 22 2024 following another all time closing high on Thursday. The support and resistance levels have also been updated. I take profits as they appear, as markets …

Spy ETF Hedge Trades And Intraday Market Updates For Thu Mar 21 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Thu Mar 21 2024 following a strong rally and new all-time closing high on Wednesday. The support and resistance levels have also been updated. I take profits as they …

Spy ETF Hedge Trades And Intraday Market Updates For Wed Mar 20 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Wed Mar 20 2024 following a higher close on Tuesday. The support and resistance levels have also been updated. I take profits as they appear, as markets are volatile …

Spy ETF Hedge Trades And Intraday Market Updates For Tue Mar 19 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Tue Mar 19 2024 following a bounce on Monday.  The support and resistance levels have also been updated. I take profits as they appear, as markets are volatile and …

Spy ETF Hedge Trades And Intraday Market Updates For Mon Mar 18 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Mon Mar 18 2024 following losses on Friday and a second straight week of losses for the SPX  The support and resistance levels have been updated. I take profits …

Spy ETF Hedge Trades And Intraday Market Updates For Fri Mar 15 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Fri Mar 15 2024 following slight losses on Thursday.  The support and resistance levels are unchanged for today. I take profits as they appear, as markets are volatile and …

Spy ETF Hedge Trades And Intraday Market Updates For Thu Mar 14 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Thu Mar 14 2024 following a slight loss on Wednesday.  The support and resistance levels are unchanged for today. I take profits as they appear, as markets are volatile …

Understanding Candlestick Signals To Profit With The SPY ETF Hedge Strategy – Wed Mar 13 2024

Understanding Candlestick Signals To Profit With The SPY ETF Hedge Strategy – Wed Mar 13 2024 Date: Trades Done Wed Mar 13 2024  Daily Starting Capital: $10,000.00 Day’s Profit:  $6,230.00 Return: 62.3% Once a trade has been entered many investors …

Spy ETF Hedge Trades And Intraday Market Updates For Wed Mar 13 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Wed Mar 13 2024 following a a large rally on Tuesday.  The support and resistance levels are updated for today. I take profits as they appear, as markets are …

Spy ETF Hedge Trades And Intraday Market Updates For Tue Mar 12 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Tue Mar 12 2024 following a slightly lower close on Monday but a choppy day of trading nonetheless.  The support and resistance levels are updated for today following Monday’s …

Spy ETF Hedge Trades And Intraday Market Updates For Mon Mar 11 2024

Here are the SPY ETF Hedge Portfolio opening trade notes for Mon Mar 11 2024  following a pullback on Friday.  The support and resistance levels are updated for today following Friday’s lower close. I take profits as they appear, as …