Oh no, things went south on the indexes pretty quickly.
I was just wondering if we should add more hedges into the rally. So far, this is the only hedging trade we made since expirations:
Submitted on 2019/08/15 at 9:46 amIn the STP, I want to add 200 Jan $35 ($7)/45 ($4.60) bull call spreads for $2.40 ($48,000) as that's another $200,000 cover and, more importantly, it lets us set stops on the 2021 $200 calls, which are up slightly ($15,000) and we'll be able to take a $100,000 gain off the table if it comes (or stop out with a small loss).
In the OOP, I want to cash out our 50 SQQQ Jan $30 calls at $9 ($45,000) and our 50 short Jan $50 calls at $3.85 ($19,250) for net $25,750 (up $34,500) and replace them with 100 of the Jan $35/45 bull call spreads at $2.40 ($24,000).
At the moment, the Jan $35 ($5.60)/$45 ($3.85) bull call spread is $1.75 so still a good deal with SQQQ at $35.35. A 10% drop in the Nas would give us a 30% pop in SQQQ for our $45 goal, returning $8.25 (603%) against a 10% correction so very good short-term protection with no margin requirement but it works better if you are able to roll out the Jan $35s before they fall below $1.75 (the net of the spread) to a new spread that covers the short Jan $45s until they expire. Then wash, rinse repeat and you can keep hedging without spending more money.
