The Market Ear recently teased a swoon in S$PX/
SPY, noting at the end of last week: "The absolute cost of a 2 month 5% put in 
SPX is trading at one of the lowest level in ~2 years."
Puts cost too much, but when
VIX is low, so are put premiums (relatively).
If you think the market could see a 5% swoon from here in the short term, there are a couple of ways to play it.
One would be to buy puts outright. As of Friday's close,SPY 385 puts for 3/31 expiry were priced at $5.17 per contract. If SPY breaks soon, your theta loss would be minimal while implied volatility increases could provide quick early profits.
Traders whose favor a fixed risk/reward strategy could purchase 395-385 put debit spreads for 3/31 expiry at $2.27 per spread (as of Friday's close). Your maximum loss would be $227 per spread with a maximum gain of $772, roughly a 3:1 R/R ratio.
As with all option plays, traders will want to watch days-to-expiry and drawdowns, and consider taking profits on the way down.
SPY, noting at the end of last week: "The absolute cost of a 2 month 5% put in SPX is trading at one of the lowest level in ~2 years."Puts cost too much, but when
VIX is low, so are put premiums (relatively).If you think the market could see a 5% swoon from here in the short term, there are a couple of ways to play it.
One would be to buy puts outright. As of Friday's close,
SPY 385 puts for 3/31 expiry were priced at $5.17 per contract. If SPY breaks soon, your theta loss would be minimal while implied volatility increases could provide quick early profits.Traders whose favor a fixed risk/reward strategy could purchase 395-385 put debit spreads for 3/31 expiry at $2.27 per spread (as of Friday's close). Your maximum loss would be $227 per spread with a maximum gain of $772, roughly a 3:1 R/R ratio.
As with all option plays, traders will want to watch days-to-expiry and drawdowns, and consider taking profits on the way down.
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.