Quick Take: Low Cost Bullish Put Hedge Strategy
Time Frame: One to Twelve Weeks.
Stock: Bullish Market Edge Opinion – Long Stock Position.
Desired Stock Price Direction: Sideways to Up.
Option Position: Short ATM Put – Long ATM -1 Put (Bullish Put Credit Spread) and Long ATM deferred Put.
Desired Result: Stock stays flat or moves up in price.
Maximum Risk: The stock declines in value. The loss is offset by the amount of the credit spread and the appreciation in the deferred anchor put.
Summary: If the stock stays flat or moves up, the credit spread will expire worthless and you will keep the credit. However, the deferred put will decline in value in line with the long stock position price rise. If the long stock position moves down, the loss will be offset by the amount of the credit spread and the appreciation in the deferred anchor put.
Quick Take: Low Cost Bearish Call Hedge Strategy
Time Frame: One to Twelve Weeks.
Stock: Bearish Market Edge Opinion – Short Stock Position.
Desired Stock Price Direction: Sideways to Down.
Option Position: Short ATM Call – Long ATM +1 Call (Bearish Call Credit Spread) and Long ATM deferred Call.
Desired Result: Stock stays flat or moves down in price.
Maximum Risk: The stock rises in value. The loss is offset by the amount of the credit spread and the appreciation in the deferred anchor call.
Summary: If the stock stays flat or moves down, the credit spread will expire worthless and you will keep the credit. However, the deferred call will decline in value in line with the stock’s price decline. If the short stock position moves up, the loss will be offset by the amount of the credit spread and the appreciation in the deferred anchor call.
The following are this week’s Low Cost Put Hedge Selections and the results for the previous week’s Open Positions. Each week, if conditions warrant one or more new stock positions are added to the Open Positions list. These stocks have a Bullish technical Opinion from Market Edge. The stocks and option spreads are added to the portfolio based on Monday’s opening prices. The stocks are removed from the portfolio after twelve weeks or if the Market Edge Opinion is downgraded from Bullish. To access The Low Cost Put Hedge informative booklet click on the Get The Booklet tab located on the home page or at the bottom of this page.
This Week’s Low Cost Bullish Put Selections
There are no new selections this week:
Current Open Positions
| Market Posture: | Bearish | VIX–> | 28.34 | Neutral | ||||||
| Stock Price Is Monday’s Opening | * After Symbol Denotes Short Stock Position | |||||||||
| # Of | Stock | S-Put | L-Put | Credit | A-Put | A-Put | A-Put | Approx | Approx | |
| Stock | Weeks | Price | Strike | Strike | Spread | Ex. Date | Strike | Debit | Div Date | Dividend |
| PG | 4 | $91.54 | 91.5 | 89.5 | $0.63 | 04/18/18 | 90.0 | $3.55 | N/A | N/A |
| BABA | 3 | $139.65 | 140.0 | 138.0 | $0.83 | 04/18/18 | 145.0 | $12.10 | N/A | N/A |
Model Portfolio – Track Record
The performance figures for the Model Portfolio are based on a hypothetical bank roll of $100,000. Dividends and transaction fees are not included in the calculations. A * before the stock symbol indicates a short sale. The anchor put debit/credits are included in the results once the position is closed.
| S&P: | 01/26/18 | 2872.87 | Dollar Profit/Loss = Stock Price Friday – Adjusted Stock Price + (Anchor | |||||||||
| S&P: | 12/28/18 | 2485.74 | Close Credit – Anchor Open Debit) When The Position Is Closed | |||||||||
| S&P Points Gain/Loss: | -387.13 | |||||||||||
| S&P % Gain/Loss: | -13.5% | Adjusted Stock Price = Open Stock Price – Total Spread Profit / Loss | ||||||||||
| Risk Capital: | $100,000 | Spread Losses Occur When The Stock’s Friday Close Is Below | ||||||||||
| Put-Call Hedge P/L: | $618 | The Short Put Strike Price | ||||||||||
| Put-Call Hedge % Return: | 0.6% | |||||||||||
| # Of Weeks-Open Positions: | 36 | Anchor Put – Debit/Credits Included In P/L Calculations Only When | ||||||||||
| Hedge To S&P P/L Ratio: | 17.0 | :1 | Positions Are Closed | |||||||||
| Win % – Adjusted Prices: | 47.6% | |||||||||||
| Annualized % P/L: | 0.9% | |||||||||||
| Transaction Costs & Dividends Not Included | ||||||||||||
| * After Symbol Denotes Short Stock Position | ||||||||||||
| Open | Open | Anchor | Anchor | Total | Adjust | Close | Stock | Anchor | Dollar | % | Anchor | |
| Date | Stock | Strike | Open | Spread | Stock | Date | Price | Close | Profit | Profit | Exp | |
| Stock | Monday | Price | Price | Debit | P/L | Price | Friday | Friday | Credit | Loss | Loss | Date |
| CELG | 01/29/18 | $105.23 | 105.0 | $5.50 | -$0.59 | $105.82 | 02/16/18 | $95.26 | $10.40 | -$5.66 | -5.4% | 04/20/18 |
| GILD | 01/29/18 | $87.82 | 87.5 | $4.50 | $0.43 | $87.39 | 04/06/18 | $73.41 | $14.27 | -$4.21 | -4.8% | 04/20/18 |
| SLB | 01/29/18 | $77.18 | 77.0 | $1.72 | -$2.19 | $79.37 | 02/16/18 | $66.28 | $10.20 | -$4.61 | -6.0% | 04/20/18 |
| EA | 01/29/18 | $116.12 | 115.0 | $4.60 | -$1.62 | $117.74 | 04/20/18 | $120.89 | $0.00 | -$1.45 | -1.2% | 04/20/18 |
| ADSK | 01/29/18 | $117.84 | 115.0 | $5.80 | -$2.59 | $120.43 | 05/11/18 | $136.21 | $0.00 | $9.98 | 8.5% | 04/20/18 |
| WDC | 01/29/18 | $89.33 | 90.0 | $5.50 | -$3.32 | $92.65 | 05/04/18 | $80.88 | $12.75 | -$4.52 | -5.1% | 05/25/18 |
| PEP | 02/05/18 | $118.24 | 120.0 | $4.35 | -$1.12 | $119.36 | 02/09/18 | $111.18 | $7.35 | -$5.18 | -4.4% | 04/20/18 |
| XOM | 02/05/18 | $82.98 | 82.5 | $2.75 | -$1.21 | $84.19 | 02/16/18 | $76.54 | $6.15 | -$4.25 | -5.1% | 04/20/18 |
| DECK | 02/12/18 | $93.90 | 92.5 | $5.15 | $2.11 | $91.79 | 04/20/18 | $89.00 | $3.50 | -$4.44 | -4.7% | 04/20/18 |
| NOW | 02/19/18 | $154.18 | 155.0 | $7.40 | -$0.55 | $154.73 | 05/18/18 | $173.94 | $0.00 | $11.81 | 7.7% | 04/20/18 |
| WDAY | 02/19/18 | $125.25 | 125.0 | $7.53 | -$1.81 | $127.06 | 05/04/18 | $130.05 | $0.00 | -$4.54 | -3.6% | 04/20/18 |
| JPM | 02/26/18 | $117.90 | 120.0 | $5.10 | -$3.54 | $121.44 | 03/23/18 | $107.01 | $13.60 | -$5.93 | -5.0% | 04/20/18 |
| SWKS | 03/05/18 | $109.14 | 110.0 | $6.70 | -$4.32 | $113.46 | 04/06/18 | $95.56 | $14.70 | -$9.90 | -9.1% | 05/18/18 |
| ATHN | 03/26/18 | $139.00 | 140.0 | $6.70 | $3.03 | $135.97 | 04/20/18 | $146.07 | $5.80 | $9.20 | 6.6% | 06/15/18 |
| AMT | 04/02/18 | $146.40 | 145.0 | $4.18 | -$2.44 | $148.84 | 04/13/18 | $138.90 | $7.30 | -$6.82 | -4.7% | 05/18/18 |
| TLT | 04/09/18 | $120.67 | 120.0 | $2.47 | $0.53 | $120.14 | 05/18/18 | $117.21 | $2.79 | -$2.61 | -2.2% | 05/18/18 |
| PG | 04/16/18 | $78.28 | 77.5 | $2.70 | -$1.17 | $79.45 | 05/04/18 | $72.43 | $5.75 | -$3.97 | -5.1% | 07/20/18 |
| Open | Open | Anchor | Anchor | Total | Adjust | Close | Stock | Anchor | Dollar | % | Anchor | |
| Date | Stock | Strike | Open | Spread | Stock | Date | Price | Close | Profit | Profit | Exp | |
| Stock | Monday | Price | Price | Debit | P/L | Price | Friday | Friday | Credit | Loss | Loss | Date |
| MSFT | 04/23/18 | $95.36 | 95.0 | $4.45 | $0.70 | $94.66 | 07/13/18 | $105.43 | $0.06 | $6.38 | 6.7% | 07/20/18 |
| CVX | 04/23/18 | $122.40 | 120.0 | $4.00 | -$0.45 | $122.85 | 07/13/18 | $124.04 | $0.19 | -$2.62 | -2.1% | 07/20/18 |
| MCD | 04/30/18 | $166.00 | 165.0 | $4.65 | -$3.35 | $169.35 | 06/29/18 | $156.69 | $8.40 | -$8.91 | -5.4% | 07/20/18 |
| XLE | 05/07/18 | $75.33 | 75.0 | $2.43 | $0.92 | $74.41 | 07/20/18 | $74.88 | $0.13 | -$1.84 | -2.4% | 07/20/18 |
| ALXN | 05/07/18 | $117.46 | 115.0 | $5.90 | $0.42 | $117.04 | 05/25/18 | $117.74 | $7.35 | $2.15 | 1.8% | 07/20/18 |
| LULU | 05/14/18 | $98.68 | 100.0 | $8.45 | $1.06 | $97.62 | 08/03/18 | $126.08 | $0.00 | $20.01 | 20.3% | 09/21/18 |
| HSY | 05/21/18 | $92.50 | 95.0 | $5.30 | $0.29 | $92.21 | 08/10/18 | $97.70 | $0.16 | $0.35 | 0.4% | 08/17/18 |
| PYPL | 05/21/18 | $81.35 | 82.5 | $4.85 | $2.67 | $78.68 | 08/10/18 | $87.01 | $0.10 | $3.58 | 4.4% | 08/17/18 |
| SWKS | 05/29/18 | $100.02 | 100.0 | $5.30 | -$0.11 | $100.13 | 07/27/18 | $95.20 | $5.50 | -$4.73 | -4.7% | 08/17/18 |
| UTX | 05/29/18 | $126.48 | 125.0 | $3.50 | $2.23 | $124.25 | 08/17/18 | $134.44 | $0.00 | $6.69 | 5.3% | 08/17/18 |
| PEP | 06/04/18 | $100.31 | 100.0 | $2.50 | $2.02 | $98.29 | 08/24/18 | $112.15 | $0.00 | $11.36 | 11.3% | 08/17/18 |
| V | 06/11/18 | $134.54 | 135.0 | $4.90 | $3.84 | $130.70 | 08/31/18 | $146.89 | $0.25 | $11.54 | 8.6% | 09/21/18 |
| LOW | 07/02/18 | $94.17 | 95.0 | $5.28 | $1.33 | $92.84 | 08/10/18 | $98.31 | $6.20 | $6.39 | 6.8% | 10/19/18 |
| EW | 07/09/18 | $146.47 | 145.0 | $8.60 | $1.36 | $145.11 | 08/24/18 | $141.73 | $8.40 | -$3.58 | -2.4% | 11/16/18 |
| DE | 07/16/18 | $135.89 | 135.0 | $5.75 | $1.22 | $134.67 | 08/03/18 | $143.36 | $0.00 | $2.94 | 2.2% | 09/21/18 |
| Open | Open | Anchor | Anchor | Total | Adjust | Close | Stock | Anchor | Dollar | % | Anchor | |
| Date | Stock | Strike | Open | Spread | Stock | Date | Price | Close | Profit | Profit | Exp | |
| Stock | Monday | Price | Price | Debit | P/L | Price | Friday | Friday | Credit | Loss | Loss | Date |
| PM | 07/23/18 | $83.44 | 82.5 | $3.75 | -$0.76 | $84.20 | 09/14/18 | $78.60 | $5.55 | -$3.80 | -4.6% | 10/19/18 |
| WMT | 07/23/18 | $87.94 | 87.5 | $3.00 | $0.34 | $87.60 | 09/28/18 | $93.91 | $0.21 | $3.52 | 4.0% | 10/19/18 |
| PG | 12/10/18 | $92.08 | 90.0 | $3.55 | $0.31 | $91.77 | $91.54 | $0.00 | -$0.23 | -0.2% | 04/18/18 | |
| BABA | 12/17/18 | $145.45 | 145.0 | $12.10 | -$0.13 | $145.58 | $139.65 | $0.00 | -$5.93 | -4.1% | 04/18/18 | |