Thursday, September 23, 2010

Bookkeeping: Restarted "Insurance" Policy SPY Put Position

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Back down at S&P 1050ish, some 3+ weeks ago I bought a small (1%ish) SPY Put position in case 1040 broke, as a 'portfolio' insurance.  My plan was to hold it for 7 weeks and/or until the market broke support and a 'woosh' down happened.  In retrospect that was a day or two away from the ultimate bottom and I changed my mind the very next day as we experienced a strong bounce.  I believe that was the day before the Chinese PMI data in fact.  I am sure those October puts now would be near zilch.

Now the S&P 500 is some 80 points higher so I am going to put a similar form of 'portfolio' insurance on but my goals will be more modest.  I simply want the gap at S&P 1090 to fill sometime in the next few months.  Hence I've bought a modest stake (1.1%) in SPY Dec 110 puts.  By buying so far in the future I should not face much decay in the next 60 days or so, so the performance will be based mostly on what the market does which is exactly what I want.   If the market keeps running and running and running the chances of this working out will be poor.  But if I can get my 40 S&P points even this very modest put position should give some very nice profits.  I'll have a 12 week window.

Long SPY Dec 110 puts in fund; no personal position


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