[Teddi Knight]

Hello Teddi and thanks for the reply.

I completely understand the notion of protection. And that a “loss’ in the protection position would mean that the “protection” did it’s job simply because the “protection” was not needed because the market did not fall to the levels the “protection’ was protecting against.

So yes, I may lose my capital on the “protection” by overall my base investments did okay.

My question was more towards when, if and how you would react to either keeping protection in place or pulling it off. What indicators do you look at? Stops?

It seems that your Calls (straddle) were somewhat of an after thought and I commend you for that decision. Great hedge. But a hedge more than “protection”. A trade in its purest form.

I ended up selling the Sept 25th $186 SPY puts for $.50. That reduced my potential loss to $1.75 from $2.25. It also reduced my potential gain to $2.25. All in all, I think that is not a bad trade off for a trade that was meant to be “protection”.

It would be enlightening to have a conversation about what I originally asked, that being, what does one look for in the charts as to when to pull off “protection”. I understand that there are several ways to take on “protection”. I was just looking for some thoughts as to when to pull “protection” once it was in place. Albeit a put spread, a straddle or even SDOW.

Thanks for the reply, Teddi.

Keep up the great work.

You are the best.

Tom

[Teddi Knight]

Think both good, Teddi gave good lead

[Teddi Knight]

haha, we were sure close in time, huh? I was willing to add a point for the extra money. I think DIS has seen it’s lows, BWDIK??

Amy

[Teddi Knight]

Agree. Short term it is difficult to know which way to jump. I’m also holding for now. Thanks for the follow up and insight!

[Teddi Knight]

STO DIS Strike 95.50 10/9 @ .70 09:57

[Teddi Knight]

STO DIS STRIKE 96.50 OCT. 9 @ .86

Amy

[Teddi Knight]

STO V 9/25 STRIKE $66.50 @ .28

Amy

[Teddi Knight]

I think we got the answer when she stopped out of the SDOW. I think I will wait until the end of the week; hard to see a big rally coming with earnings around the corner, and FedEx missing this AM. We all know how fast things can change.

Amy

[Teddi Knight]

Thanks!

[Teddi Knight]

NO, waiting for Teddi to add if she does, although I don’t have as many shares as she does. I didn’t do the calls…bought UDOW instead, but sort of the same thing.

If the market melts up, which is what no one expects, then I want to be able to benefit from it…..lots of expirations coming up.

Amy

[Teddi Knight]

Hi Amy, I am still holding SDOW. Are you adding before the close today?

[Teddi Knight]

Thomas, I, too, am in your position, as I believe is Teddi since I think we got involved through her suggestion. It’s a long way to 9/25:)

Amy

[Teddi Knight]

Teddi, do you have any words of wisdom as to what to watch for if one is holding SPY puts for protection? Do we hold them or should we sell them? Do we just wait to see the markets reaction to the Fed on Thursday and take our queue from that? What indicators might give us some insight? As I posted above, I am holding the Sept 25th SPY $190 puts. I am currently underwater on them.

Looking forward to your insight.

Tom

[Teddi Knight]

Well, I had to roll from May to get profitable, but I have time until earnings, and only three days during which time will decay fast if the stock stays above $66.

Amy

[Teddi Knight]

Monday I was tempted to STO the NUE Sep-25-2015 38.50 Put @ 0.38 or 0.35. This strike seems reasonable to absorb some linear price erosion while also staying below support.

However in considering a recovery plan, I’m unclear on how long it will take to recover from a non-linear price drop through support and below the strike. Price erosion continues to be evident in the 200 day moving average. Lower support appears around $34.

[Teddi Knight]

STO SAFM STRIKE $65 9/18 @ .55

Not been that low since the August crash day….it’s a gamble since I really don’t want to roll. Might just be a black jack trade….win or lose, didn’t make a big bet. Just bored waiting for Queen Janet.

Amy

[Teddi Knight]

Keeping the NUE STRIKE $39 – 9.18 @ .50—volume isn’t unusually high after poor China numbers. Planning to close early but for pennies.

STO the NUE STRIKE $39 – 9-25 @ .52

If I need to by Friday, I will roll into the 9/25 puts.

Of course best laid plans…..

Amy

[Teddi Knight]

Not sure I understand your question. She sold 10 put contracts expiring today at the $95 strike for .75 cents. MCD closed today @ $97. It seems to be a winning trade. What am I missing? Somehow I missed that trade alert, or I would have done it too!

Amy

[Teddi Knight]

ok, sounds good. You always have a good reason….I don’t know why I even ask:)

Amy

[Teddi Knight]

not necessarily a BEAR market IMO, but when the market looks toppy, trading within a range and is at the top of the range with decreasing volume, decreasing new highs, etc. SDOW is a good insurance policy. Teddi usually has the knack of finding those times better than anyone.

Most of us have a long based portfolio, so the SDOW does balance a bit. It’s like having insurance.

JMO,

Amy

[Teddi Knight]

gotcha, that’s what I did, but went to December which was probably too far.

Amy

[Teddi Knight]

I use IB –good pricing– some don’t like but has worked well for me for quite a while

[Teddi Knight]

Aug 19 2015 – Sold 5 naked puts Sept 4 expiry at $62.00 put strike for .70 cents.

I like the Sep 25 expiry period which is just 2 weeks away. The $54.50 can be sold for perhaps as much as 32 to 35 cents and the $55 for 38 to perhaps 42 cents.

Teddi, Did you roll this first trade? As I mentioned above, I rolled out to Dec. I al a little leery to have double positions in BMY, and was wondering what you did with the first trade?

Amy

[Teddi Knight]

Teddi, for your trade today you recommended the following:

I plan to sell the Sep 18 $39.50 put strike and aim for 25 cents. If I cannot get the 25 cents I will move to Sep 25 expiry and move to $39 and try for 33 to 35 cents.

You already suggested the above trade which I entered. Since that suggestion is not yet expired, are you suggesting we double down on NUE and add today’s trade expiring next week?

Amy

[Teddi Knight]

Thomas, I did the same thing, but paid $2.40. Also bought the SDOW. I think of all the things Teddi has taught us is how to really deal with down markets. I had never thought about selling naked calls, buying SPY puts, etc. before I joined here.

If anyone heard David Teper this AM on CNBC, he had a great analogy about the direction of the market compared to rivers running upstream or downstream.

Seems we may be running downstream for a while. I am keeping my SDOW and my SPY puts, and hope for a rally to add to them.

Amy

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