In a video from last week, we looked at a hedging strategy and that is a Put Ratio Backspread in SPY.
You will see that the hedge can put put on for basically zero cost (not zero risk), and should do well if the market tanks and there is an associated rise in implied volatility.
Worst case for the trade is a small decline in SPY with a drop in volatility.
Let me know what you think.
I’ll provide an update on this trade in a few weeks.
Trade safe!
Disclaimer: The information above is for educational purposes only and should not be treated as investment advice. The strategy presented would not be suitable for investors who are not familiar with exchange traded options. Any readers interested in this strategy should do their own research and seek advice from a licensed financial adviser.
