Some Hedging choices using the SPDR Trust Series I ($SPY)

I have been doing some review this morning on the Option chains for $SPY and noticed how relatively inexpensive it is to own Puts into February. Here is a quick look at a few of the Weekly chains with the $147 Put highlighted:

SPY_Feb_OptionsThere are several approaches one can take here to create a hedge on a long book for the next few weeks. To lessen the cost, here are a few paths:

  • Buy the Feb 08w 147 Put (bid/ask of 1.86/1.90)
  • Sell the Feb 01w 145 Put (bid/ask of .57/.62). If this ultimately expires the week of expiration, then sell the Feb 08w 144 Put to further reduce cost (or other appropriate strike)

Another path:

  • Buy the Feb 08w 147/144 Put Spread (in the range of .92-.95 cost)

Just a few of the many ways to have some protection as we make our way into the heart of Earnings season.

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