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fradav

SPY diagonal hedge/trade

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Hi Kim,

 

I'm in the RUT IC. As a hedge against a post FOMC rally I'm thinking of initiating a SPY put diagonal trade similar to what Chris trades, buying Dec 14 170 puts and selling Sep wk4 173s in a 20\15 ratio. If there's a rally it's a good hedge and if the opposite happens the IC goes back in the profit zone and the SPY losses are only temporary (if I recover enough extrinsic over time). VIX isn't that high so Dec puts are not that expensive and could be ok time to enter trade.

 

Any thoughts?

Edited by fradav

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I plugged it into ONE software and this is what I get:

 

post-1-0-38325600-1379521513_thumb.png

 

The potential gain is pretty small even if SPY is exactly at 173 a week from now, and P/L zone is pretty narrow. Not sure I like it.

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kim what is this ONE software?  i google'd it but don't see anything on it?

 

 

I plugged it into ONE software and this is what I get:

 

attachicon.gifchart.PNG

 

The potential gain is pretty small even if SPY is exactly at 173 a week from now, and P/L zone is pretty narrow. Not sure I like it.

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