In 1993 when SPDR S&P 500 or the SPY as it became known was introduced I paper traded it for a year and compared results against a number of other products I had tried for hedging my portfolio against losses in market downturns.
The SPY PUT returns were remarkable and since then I have had a love affair with the SPY PUT. It is the main and usually only method I use to hedge my entire portfolio of stocks. I have tried a number of other methods including the popular power shares QQQQ but I always end up coming back to the SPY PUT. For interested readers this spy put link will take you to SPDR website where you can read more about SPDR funds.
On my website I have the SPY PUT trades for the past 2 years which readers can review here:
SPY PUT Trades for 2010: In 2010 my spy put hedge returned $65,409.00 which protected my entire USA Stock Portfolio against a 13% decline.
SPY PUT Trades for 2011: In 2011 my spy put hedge returned $75,631.00 which protected my entire USA Stock Portfolio against a 12.5% decline.
Through following the various trades from each year I hope other investors will consider the importance of hedging their investments whether through the SPY PUT method I have chosen or other methods. With the volatility in today’s stock markets it is obvious that all investors need to learn hedging techniques to not only protect their portfolios from large losses but to earn significant gains in market downturns.
I recommend paper trading for several months to reach consistent profits and returns. As volatility is high in the SPY, a winning trade can quickly become a large loss without proper planning for closing either a winning trade or losing trade quickly. You can receive SPY Put daily quotes at Google Finance or your discount broker.
Spy Put Hedge Trades Introduction
The SPY Put is my method of hedging my portfolio against market corrections and bear markets. Sometimes the correction is just a week and other times it can last months. In 2011 the SPY Put became important from May through to November as it worked to guard against losses in my overall portfolio of stocks.
Since I engage primarily in put selling for my portfolio the spy put works well in combination with put selling. With put selling I am already engaged in selling naked put options usually below present stock valuations. I therefore already have some protection against market or stock declines built into my overall portfolio strategy. Using the spy put to hedge is a wonderful combination then. While the spy put may protect against a 10% overall decline in the portfolio, the protection is actually a lot larger since the puts I sell are often 5% to 10% below present stock values. When combined with the spy put hedge my protection is often 15% to 20% which in 2011 was perfect for protecting my positions as the stock markets in general fell slightly more than 20%.
The three articles below offer further details as to my hedge strategy and how I apply it.
SPY PUT HEDGE TRADES FOR 2012
Here are the ongoing trades for 2012. YELLOW indicates current trade
|Date||SPY at time|
|Feb 9||135.41||Bought 20 PUTS 21April $135 strike for $4.35||32.00||(8732.00)|
|Feb 10||134.05||Sold 10 PUTS 21April $135 strike for $5.15|
Comments: With the market selling off hard in the morning it has stayed low most of the day. Towards the afternoon around 1:30 PM selling again pushed the S&P 500 lower at which time I sold half of my SPY PUT contracts. The rest I will hold over the weekend. Select this link to read an article discussing this trade.
|Feb 13||134.75||Sold 10 PUTS 21April $135 strike for $4.35|
Comments: Select this link to read an article which discusses the past two trading sessions.
|Feb 15||135.15||Bought 10 SPY PUTS 21APRIL $135 for $4.22|
Comments: Select this link to read about this trade and the subsequent loss. The loss was expected as I felt it was worthwhile to hold my position for portection as the market was extremely overbought.
|Feb 23||135.60||Sold 10 SPY PUTS 21APRIL $135 for $3.64||19.50||3620.50||(619.00)||110.00|
|Mar 6||135.10||Bought 10 SPY PUT Contracts 21APR $135 for $3.39||19.50||(3409.50)|
|Mar 6||135.12||Bought 20 SPY PUT Contracts 21APR $135 for $3.34||32.00||(6712.00)|
|Mar 6||134.57||Sold 30 SPY PUT Contracts 21APR $135 for $3.78|
Comments: This trade was a 1 day trade for when the market fell 1.6% on March 6. Select this link to read about this trade and the subsequent loss on the next day’s trade.
|Mar 7||135.89||Bought 20 SPY PUT Contracts 21APR $135 for $2.96||32.00||(5952.00)|
|Mar 8||136.82||Sold 20 SPY PUT Contracts 21APR $135 for $2.58|
Comments: Select this link to read about this loss from the March 7 to March 8 trade.
|Apr 4||140.24||Bought 20 SPY PUT Contracts 19MAY $140 for $2.91||32.00||(5852.00)|
|Apr 4||139.52||Sold 20 SPY PUT Contracts 19MAY $140 for $3.20|
Comments: Spy Put option selling is not as profitable during bull markets as in bear markets. The analysis of the Apr 4 trade also looks at the SPY PUT CALL RATIO and what it means as well as SPX PUTS versus SPY PUTS. Select this link to read Apr 4 2012 trade.
|Apr 9||138.17||Bought 20 SPY PUT Contracts 19MAY $138 for $2.89||32.00||(5812.00)|
|Apr 9||137.87||Sold 20 SPY PUT Contracts 19MAY $138 for $2.93||32.00||5828.00||16.00||992.00|
|Apr 9||138.27||Bought 20 SPY PUT Contracts 19MAY $138 for $2.87||32.00||(5772.00)|
|Apr 9||137.98||Sold 20 SPY PUT Contracts 19MAY $138 for $3.01||32.00||5988.00||213.00||1205.00|
|Apr 9||138.45||Bought 20 SPY PUT Contracts 19MAY $138 for $2.74||32.00||(5512.00)|
|Apr 9||138.31||Sold 20 SPY PUT Contracts 19 MAY $138 for $2.86||32.00||5688.00||176.00||1381.00|
|Apr 9||138.70||Bought 30 SPY PUT Contracts 19MAY $138 for $2.68||44.50||(8084.50)|
|Apr 9||138.24||Sold 30 PUT Contracts 19MAY $138 for $3.03|
Comments: Today’s trades were very good but the best was the last trade which started at 3:00 PM. In this article I explain how for day trading to spot a peak and know that selling is about to start and it is time to buy puts. It was a classic pattern trade and I held to the close. Select this link to read April 9 2011 trade to understand why I increased my puts for the final trade of the day.
|Apr 11||137.81||Bought 20 SPY PUT Contracts 19MAY $138 for $2.98||32.00||(5992.00)|
|Apr 11||136.08||Sold 20 PUT Contracts 19MAY $138 for $3.95||7868.00||1876.00||4218.00|
|Apr 13||137.84||Bought 20 SPY PUT CONTRACTS 19MAY $138 for $2.89||32.00||(5812.00)|
|Apr 16||136.75||Sold 20 PUT CONTRACTS 19MAY $138 for $3.55||32.00||7068.00||1256.00||5474.00|
|May 4||137.90||Bought 30 SPY PUT CONTRACTS 16JUNE $138 for $3.27||44.50||9854.50|
|May 4||137.20||Sold 30 SPY PUT CONTRACTS 16JUNE $138 for $3.78|
Comments: After sending out my market timing notice last night that the market direction was down, I was slow to get going today which cost me a better profit. Select this link to read the May 4 SPY PUT OPTION article and understand this trade better.
|May 8 12||136.40||Bought 40 SPY PUT Contracts 16JUNE $136 for $3.38|
COMMENTS: To understand this trade and the reason for purchasing so many put contracts read this article.
|May 8 12||135.30||Sold 10 SPY PUT Contracts 16JUNE $136 for $3.87||19.50||3850.50|
|May 8 12||135.27||Sold 20 SPY PUT Contracts 16JUN $136 for $3.91||32.00||7788.00|
|May 8 12||135.10||Sold 10 SPY PUT Contracts 16JUN $136 for $4.00||19.50||3980.50||2042.00||8957.00|
|May 8 12||135.60||Bought 20 SPY PUT Contracts 16JUN $135 for 3.05||32.00||6132.00|
|May 8 12||135.20||Sold 20 SPY PUT Contracts 16JUN $135 for $3.44||32.00||6848.00||716.00||9673.00|
|May 9 12||135.42||Bought 30 SPY PUT Contracts 16JUN $135 for 3.37||44.50||10154.50|
|May 9 12||134.63||Sold 30 SPY PUT Contracts 16JUN $135 for $3.77||44.50||11265.50||1111.00||10784.00|
|May 14 12||134.58||Bought 20 SPY PUT Contracts 16JUN $134 for $2.99|
Comments: To Read about this trade select this link.
|May 14 12||133.99||Sold 20 SPY PUT Contracts 16 JUN $134 for $3.39||32.00||6748.00||736.00||11520.00|
|May 14 12||135.01||Bought 20 SPY PUT Contracts 16JUN $134 for $2.92||32.00||(5872.00)|
|May 14 12||134.08||Sold 20 SPY PUT Contracts 16JUN $134 for $3.40||32.00||6768.00||896.00||12416.00|
|May 17 12||132.62||Bought 30 SPY PUT Contracts 29JUN $132 for $3.79||44.50||(11414.50)|
|May 17 12||131.00||Sold 30 SPY PUT Contracts 29 JUN $132 for $4.67||44.50||13965.50||2551.00||14967.00|
|May 23 12||131.45||Bought 30 SPY PUT Options 29JUN $131 for $3.47|
Comments: To Understanding Today’s trade read this article which discusses using the Momentum tool which trading the SPY PUT. The momentum tool is used to assist in not staying too longer in the S&P 500.
|May 23 12||130.55||Sold 30 SPY PUT Options 29JUN $131 for $4.21||44.50||12585.50||2131.00||17098.00|
|May 30 12||132.10||Bought 30 SPY PUT Contracts 29JUN12 $132 for $3.34||44.50||(10064.50)|
|May 30 12||131.66||Sold 30 SPY PUT Contracts 29JUN12 $132 for $3.63|
Comments: This article explains this day trade in the SPDR 500 ETF.
|May 30 12||132.24||Bought 30 SPY PUT Contracts 29JUN12 $132 for $3.29||44.50||(9914.50)|
|May 30 12||131.55||Sold 30 SPY PUT Contracts 29JUN12 $132 for $3.67|
Comments: This article explains the second trade in the SPDR 500 ETF for today.
|May 31 12||131.77||Bought 40 SPY PUT Contracts 29JUN12 $131 for $3.04||57.00||(12217.00)|
|May 31 12||130.44||Sold 40 SPY PUT Contracts 29JUN12 $131 for $3.69||57.00||14703.00||2486.00||21416.00|
|May 31 12||131.65||Bought 40 SPY PUT Contracts 19JUN12 $131 for $3.16||57.00||(12697.00)|
|May 31 12||131.31||Sold 40 SPY PUT Contracts 19JUN12 $131 for $3.43|
Comments: Both these trades today were increased in the number of put contracts I purchased. The market direction column from yesterday clearly showed that I expect the market to retest the 1300 level. In the morning when the market opened, it started falling almost immediately. I bought 40 contracts which is usually the highest number I buy at any one time. It was obvious to me based on my market timing comments from yesterday that the market direction would be down. I did not expect it to test 1300 immediately and was surprised by thje strength of the fall. From 1300 the market rallied back and I boughtmy spy puts again in the afternoon shortly after 1 PM. By 2 PM I had unloaded them again. These types of returns are normally only had in severe corrections or periods of high anxiety among investors. Yet the VIX closed at 24.06 today which would seem to indicate not a lot of fear yet in the market.
|Jun 12||131.42||Bought 20 SPY Call Contracts 21JUL12 $131 for $3.57||32.00||(7172.00)|
|Jun 12||132.53||Sold 20 SPY Call Contracts 21JUL12 $131 for $4.23|
Comments: This trade is a little unusual for me. Instead of SPY PUTS I purchased SPY Calls today in the SPDR 500 ETF or SPY as it is commonly called. Yesterday’s market selloff caught me by surprise and I did not do any spy put contracts. You can read about this SPY CALL trade through this link.
|Jun 21||135.48||Bought 20 SPY PUT Contracts 18AUG12 $135 for $3.31||32.00||(6652.00)|
|Jun 21||133.51||Sold 20 SPY PUT Contracts 18AUG12 $135 for $4.27|
Comments: This SPY PUT Trade was among the easiest this year but it could have been a lot better as explained in this article.
|Jun 22||133.60||Bought 10 SPY PUT Contracts 18AUG12 $134 for 3.90|
Comments: To under this trade and the problems with holding SPY PUT contracts over a weekend read this article.
|Jun 25||130.93||Sold 10 SPY PUT Contracts 18AUG12 $134 for $5.25||19.50||5230.50||1311.00||26805.00|
|Jun 26||132.26||Bought 10 SPY PUT Contracts 18AUG12 $132 for $3.58||19.50||(3599.50)|
|Jun 27||132.65||Sold 10 SPY PUT Contracts 18AUG12 $132 for $3.47||19.50||3450.50||(149.00)||26656.00|
|June 27||133.33||Bought 20 SPY PUT Contracts 18AUG12 $132 for $3.15||32.00||(6332.00)|
|June 27||133.05||Sold 20 SPY PUT Contracts 18AUG12 $132 for 3.36||32.00||6688.00||356.00||27012.00|
|Jun 28||131.71||Bought 10 SPY PUT Contracts 18AUG12 $132 for $3.65||19.50||(3669.50)|
|Jun 28||131.30||Sold 10 SPY PUT Contracts 18AUG12 $132 for $3.98||19.50||3960.50||291.00||27303.00|
|July 12||133.90||Bought 20 SPY PUT Contracts 18AUG12 $133 for $2.38||32.00||(4792.00)|
|July 12||133.51||Sold 20 SPY PUT Contracts 18AUG12 $133 for $2.63||32.00||5228.00||436.00||27739.00|
|July 12||133.94||Bought 10 SPY PUT Contracts 18AUG12 $133 for $2.37||19.50||(2389.50)|
|July 12||133.53||Sold 10 SPY PUT Contracts 18AUG12 $133 for $2.60||19.50||2580.50||191.00||27930.00|
|July 24||134.52||Bought 20 SPY PUT Contracts 22SEP12 $134 for $3.85||32.00||(7732.00)|
|July 24||133.35||Sold 20 SPY PUT Contracts 22SEP12 $134 for $4.59|
Comments: To understand this SPY PUT Trade read this article looking at the 2 Key Elements that assist me in profitable SPY PUT Option trading.
|July 31||138.45||Bought 20 SPY PUT contracts 22SEP12 $138 for $3.77||32.00||(7572.00)|
|July 31||137.90||Sold 20 SPY PUT contracts 22SEP12 $138 for $4.07||32.00||8108.00||536.00||29882.00|
|Aug 1||138.55||Bought 30 SPY PUT contracts 22SEP12 $138 for $3.74||44.50||(11264.50)|
|Aug 1||137.65||Sold 30 SPY PUT contracts 22SEP12 $138 for $4.27||44.50||12776.50||1512.00||31394.00|
|Aug 2||137.33||Bought 20 SPY PUT contracts 22SEP12 $137 for $3.52||32.00||(7072.00)|
|Aug 2||135.75||Sold 20 SPY PUT contracts 22SEP12 $137 for $4.90||32.00||9768.00||2696.00||34090.00|
|Aug 23||141.27||Bought 30 SPY PUT contracts 20OCT12 $141 for $3.49||44.50||(10514.50)|
|Aug 23||140.59||Sold 30 SPY PUT contracts 20OCT12 $141 for $4.17||44.50||12465.50||1951.00||36041.00|
|Sep 25||145.88||Bought 30 SPY PUT contracts 20OCT12 $145 for $3.27||44.50||(9854.50)|
|Sep 25||144.39||Sold 30 SPY PUT contracts 20OCT12 $145 for $4.16||44.50||12435.50||2581.00||38622.00|
|Sep 26||143.89||Bought 30 SPY PUT contracts 17NOV12 $143 for $4.81||44.50||(14474.50)|
|Sep 26||143.09||Sold 30 SPY PUT contracts 17NOV12 $143 for $5.62||44.50||16815.50||2341.00||40963.00|
|Sep 26||143.77||Bought 20 SPY PUT contracts 17NOV12 $143 for $4.85||32.00||(9732.00)|
|Sep 26||143.51||Sold 20 SPY PUT contracts 17NOV12 $143 for $4.96||32.00||9888.00||156.00||41119.00|
|Sep 26||143.79||Bought 20 SPY PUT contracts 17NOV12 $143 for $4.83||32.00||(9692.00)|
|Sep 26||143.76||Sold 20 SPY PUT contracts 17NOV12 $143 for $4.83||32.00||9628.00||(64.00)||41054.00|
|Sep 26||143.93||Bought 20 SPY PUT contracts 17NOV12 $143 for $4.80||32.00||(9632.00)|
|Sep 26||143.41||Sold 20 SPY PUT contracts 17NOV12 $143 for $5.05||32.00||10068.00||436.00||41490.00|
|Oct 9||145.42||Bought 20 SPY PUT Contracts 17NOV12 $145 for $3.77||32.00||(7572.00)|
|Oct 9||144.33||Sold 20 SPY PUT Contracts 17NOV12 $145 for $4.47||32.00||8909.00||1336.00||42826.00|
|Oct 10||144.18||Bought 20 SPY PUT Contracts 17NOV12 $144 $3.10||32.00||(6232.00)|
|Oct 10||143.28||Sold 20 SPY PUT Contracts 17NOV12 $144 $3.82||32.00||7608.00||1376.00||44202.00|
|Oct 12||143.78||Bought 20 SPY PUT Contracts 17NOV12 $143 for $2.94||32.00||(5912.00)|
|Oct 12||142.77||Sold 20 SPY PUT Contracts 17NOV12 $143 for $3.43||32.00||6828.00||916.00||45118.00|
|Oct 19||145.04||Bought 30 SPY PUT Contracts 17NOV12 $144 for $1.59||44.50||(4814.50)|
|Oct 19||143.88||Sold 30 SPY PUT Contracts 17NOV12 $144 $2.24||44.50||6675.50||1861.00||46979.00|
|Oct 23||141.70||Bought 40 SPY PUT Contracts 17NOV12 $141 for $2.21||57.00||(8897.00)|
|Oct 23||140.92||Sold 40 SPY PUT Contracts 17NOV12 $141 for $2.55|
The S&P plunged today. To understand this trade read this Spy Put Article.
|Oct 23||141.82||Bought 40 SPY PUT Contracts 17NOV12 $141 for $2.28||57.00||(9177.00)|
|Oct 23||141.37||Sold 40 SPY PUT Contracts 17NOV12 $141 for $2.37||57.00||9423.00||246.00||48472.00|
|Nov 7||141.22||Bought 50 SPY PUT Naked Put Contracts 22DEC12 $141 for $3.59 (Note change in commission to $1.00 a contract from $1.25 plus $7.00 a trade))||57.00||(18007)|
|Nov 7||140.38||Sold 50 SPY PUT Naked Put Contracts 22DEC12 $141 for $3.87||57.00||19293.00||1286.00||49758.00|
|Nov 8||140.28||Bought 100 SPY PUT Contracts $138 22DEC12 for $2.69||107.00||(27007.00)|
|Nov 8||138.46||Sold 100 Spy Put Contracts $138 22DEC12 for $3.36|
Comments To Understand this trade and why the number of contracts was double from the previous day read this article.
|Dec 27||141.71||Bought 40 SPY PUT Contracts $141 19Jan13 for $2.75 (not change in commission to $1.00 a contract plus $5.00 a trade)||45.00||(11045.00)|
|Dec 27||140.39||Sold 40 SPY PUT Contracts $141 19Jan13 for $3.15||45.00||12555.00||1510.00||57754.00|
|Dec 28||140.89||Bought 40 SPY PUT Contracts $141 19Jan13 for $2.40||45.00||(9645.00)|
|Dec 28||140.35||Sold 40 SPY PUT Contracts $141 19Jan13 for $2.95||45.00||11755.00||2110.00||59864.00|
|Dec 28||141.26||Bought 40 SPY PUT Contracts $141 19Jan13 for $2.35||45.00||(9445.00)|
|Dec 28||140.17||Sold 40 SPY PUT Contracts $141 19Jan13 for $3.40|
Comments: To understand the Dec 28 2012 Spy Puts Trades and the value of trading against heightened volatility for larger profits read this article which explains in detail how to trade the Spy Puts during periods of increased market volatility. It is 9 pages in length containnig 3009 words.