The Low Cost Bullish Put Hedge Strategy For The Week Of 04-12-21

by | Apr 12, 2021 | The Low Cost Put Hedge, Uncategorized

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.

What Can Happen At Expiration And What Action Should I Take?

  1. Stock Position: Stock Price Closes Up Or Down.                                      Hold For 12 Weeks Unless Market Edge Downgrades The Stock.
  2. Short Put: If In The Money (ITM).                                                              Close The Spread.
  3. Short Put: If Out Of The Money (OTM).                                                     Let The Spread Expire Worthless.
  4. Long Put: If In The Money (ITM).                                                               Close The Spread.
  5. Long Put: If Out Of The Money (OTM).                                                      Let The Spread Expire Worthless.
  6. Long Anchor Put: If In The Money (ITM).                                                   Hold.
  7. Long Anchor Put: If Out Of The Money (OTM).                                          Hold.

The following are this week’s Low Cost Put Hedge Selections. 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.

Current Low Cost Bullish (Long Stock) Put Hedge Selections

New Positions: None

 

The Market Edge – Market Posture: Bullish
Current Stock Price Is Monday Morning
Initial Current Short Put Long Put Initial Initial Initial
Long Stock # Of Stock 04/16/21 04/16/21 Credit Anchor Put Anchor Put Anchor Put Approx Approx
Stock Price Weeks Price Strike Strike Spread Exp. Date Strike Debit Div Date Div
AXP $139.44 7 $146.92 147.0 145.0 $0.78 06/18/21 135.0 $8.15 03/31/21 $0.43
PG $135.76 2 $135.98 136.0 134.0 $0.62 07/16/21 130.0 $3.25 N?A N/A
ATM = At The Money. SP = Strike Price
Closed Positions
# Of Close
Stock Weeks Price % P/L Reason
NONE

The information contained herein has been carefully compiled from sources believed to be reliable, but its accuracy is not guaranteed.  Past performance is not necessarily indicative of future results. Traders should read The Option Disclosure Statement before trading options. No representation is made that any account is likely to achieve profits or losses similar to those shown. Due to the possibility of human and/or mechanical error by The Optionomics Group LLC, Inc., its sources or others does not guarantee the accuracy, completion or availability of any information contained herein and is not responsible for any errors or omissions or for results obtained from the use of such information.