Wednesday, July 7, 2010

Added a SPY Put Condor Hedge

Yesterday I sold the 101/107 July Strangle for a $1.50 leaving my break evens at 99.5 and 108.5. I like the trade but the downside risk was making me a little uncomfortable so last night and this morning I was trying to come up with an affective hedge with a very low cost. I finally landed on the put Condor.

This morning I bought 7 100/99/98/97 put Condor for $0.09 or a total debit of $63. This effectively moved my break even down to 97.72 by July Expiration. The first picture below is the Condor in isolation, then I have the strangle (which by the way is now unbalanced by two additional 107 calls sold to the upside) and Condor in aggregate.

If you can think of a cheaper and more efficient way to accomplish such a hedge please comment.

1 comment:

  1. On Today's huge move to the upside I decided to get short some more SPY by way of selling the 108/110 July '10 call spreads @ $0.48. I sold 5 for a total credit of $240.

    Dead cat bounce anyone? Just because we got a bounce does not mean the market is all of a sudden healthy again.