Tuesday, November 16, 2010

Bookkeeping: Adding to My Long Term Portfolio Insurance via Jan 115 SPY Puts

For the past 6-7 weeks, to ill effect, I've held some long dated puts on the S&P 500 index as an insurance policy.  It has generally been in the 0.5 to 1% range, and has been a money loser repeatedly during the melt up rally (large in % terms, but manageable in dollar terms).  As an insurance policy that is understandable, as the long side of the portfolio has been going up, and hence this part of the portfolio down.   That said, I'd like to see the insurance pay off one of these days since a big drop in the market would create some whopper gains in this instrument.  The 115 contract is roughly S&P 500 level 1150, so if either of these gaps of 1090 or 1110 are filled in the coming months, good things should happen.

With the first signs of weakness in the broader market the past 3 days, I've increased my 'insurance policy' from a 0.5% exposure to about 1.2%.  That is the largest it has been since I started it... I have until January for this to pay off.

I also threw some short TNA ETF (2% exposure) on as a hedge, as a nearer term play.

Long January 2011 SPY 115 puts in fund; no personal position


Disclaimer: The opinions listed on this blog are for educational purpose only. You should do your own research before making any decisions.
This blog, its affiliates, partners or authors are not responsible or liable for any misstatements and/or losses you might sustain from the content provided.

Copyright @2012 FundMyMutualFund.com