This is a FullyInformed Members strategy article studying the Spy Put Options Strategy to assist readers in improving their profits and understanding when and how to trade during choppy markets like today (June 11 2013) .As regular readers know I use the Spy Put Options to take advantage of downturns in the market direction. The results can be excellent if the trades are conducted properly. I only trade within the Spy Put Options when the trend is definitely lower. This morning (June 11 2013) market direction opened with a gap down. So what is the normal course of action I would take on such a day? Before the markets opened the futures had the S&P down almost 1% in reaction to world-wide markets that were soft at the open. To trade Spy Put Options in this environment though is not as easy as you might think despite the obvious open which pointed to the market moving lower.
This strategy article discusses the importance of understanding the overall market direction despite the morning gap down opening. It shows how to select when to enter a Spy Put Options trade in such an environment and how to protect from losses if the entry is wrong.