Speaking on Bloomberg
Markets, Pravit Chintawongvanich of Macro Risk Advisors shared with the audience a hedging strategy in SPDR S&P 500
ETF Trust (NYSE: SPY).
He said he isn't trying to call a top in the S&P 500, but in case that some people decide to take profits or the current
euphoria decreases, he wants to use options to hedge from a possible decline.
Chintawongvanich wants to buy the March 215 put, sell three March 195 puts and buy two March 185 puts for $1.14. The strategy
offers protection between $213.86 and $195. If the price of SPDR S&P 500 ETF
Trust stays above $195, the hedge can maximally make a profit of $18.86. In case of a decline to $185 or lower, the trade is
going to make a maximal loss of $1.14.
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