Understanding Building The Protective Cash Cushion With The Spy Put Hedge Trade – Oct 15 2015

Oct 15, 2015 | Profit And Income Strategies, SPY ETF Hedge Strategy (SPY)

On days where the market is sitting with selling pressure keeping the S&P in a see-saw around support and resistance levels such as the 2000 level is, I can build up my protection cushion through trading Spy Put Options. While it is true that spy calls can also be used, I prefer the spy put options on days like today where the index is hovering at an important support level.

The 2000 Support Level

2000 is a very important support level and has been for almost the entire year. Trading intraday on days when holding 2000 level is in doubt has really assisted in building up the cash cushion I use to protect my portfolio against major downturns.

The Protective Cash Cushion

In its most basic term the protective cash cushion is the profits I keep earnings most days when I trade the spy put options intraday. Days like today for example where I have completed 2 trades so far, can really add up and eventually the cash cushion which I started the year out with keeps growing and growing until eventually it can support a decline of anywhere from 5% to 10% of the entire portfolio. In a bear market the protective cash cushion can skyrocket to easily 20% to 25% of the entire portfolio’s value simply because volatility is so high.

This strategy article for members looks at using two different indicators to time entry and exit points as I look again at the value of learning to trade markets stuck at support and resistance levels.

SPY PUT Hedge Trades for Oct 15 2015

This FullyInformed Members Strategy Analysis of the SPY PUT Strategy trade can be directly accessed through this link or Members can login here. Non-members can join here or read about the benefits of a membership.

Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk. Stocks, options and investing are risky and can result in considerable losses. None of the strategies, stocks or information discussed and presented are financial or trading advice or recommendations. Everything presented and discussed are the author’s own trade ideas and opinions which the author may or may not enter into. The author assumes no liability for topics, ideas, errors, omissions, content and external links and trades done or not done. The author may or may not enter the trades mentioned. Some positions in mentioned stocks may already be held or are being adjusted.