SPY/Winston - Well, if you have $1M in SPY you want a $100,000 hedge against a $200,000 drop (20%). Your SDS Sept $23/30 spread at $1.10 is at the money and SDS is a 2x hedge so a 20% drop in SPY would be a 40% gain in SDS to $32 - so good logic there. To get $100,000 ($200,000 would be way over-hedged) you need 150ish of the spreads for $16,500 and that would pay $105,000 back and likely around $50,000 on a 10% drop. I guess you could go for 200 at $22,000 but the question is - do you feel your SPY will gain 10% and that the chance of gaining 10% on SPY is as good or better than losing 10% or else - why be in the trade at all?
SSD is the ultra-long SPY and it's at $85 and you can buy the Sept $80 ($10)/85 ($7) bull call spread for $3 so $300,000 pays back $500,000 ($200,000 profit) if the S&P simply stays flat and you can pull the plug with a $150,000 loss and buy 100 of the SDS hedges for $11,000 and they would pay $70,000 if the S&P does drop on you and now you've only tied up $311,000 and you have $689,000 to play with with essentially the same upside.
Since you are not likely to lose more than $80,000 on a 20% drop in SPY, you'd still have $920,000 left to invest when stocks are 20% cheaper than they are now and you can start by selling some puts in things you REALLY want to buy if the market does drop like BA 2022 $250 puts, which are still $16 so, if you are willing to commit to $125,000 of BA, then you can collect $8,000 for 5 short puts.
