Update on Open Trades Expiring In June (15th)

With 14 days remaining to expiration all filled trades are safe and should be expiring worthless on Friday June 15th.

We continue to have trouble getting the NDX and RUT Bull Put Trades filled. I have added color highlighting to the summary report. You can now easily identify my trade alerts that have been filled (blue), trades that have not been filled and cancelled (red), and new trades that have orders placed (green). This is the fist month I have had these many replacement trades for earlier trades that were not filled and cancelled. With all the Indexes rising to new records each week it makes completing safe Bull Put trades very difficult. All we can do is keep ordering replacement trades with higher short and long option strikes. We only need one or 2 down days for these replacement orders to be filled next week.

My credit spread strategy works best when the market is hovering, trading neutrally or just rising very slowing. Today's market is a giant Bull Market and no one knows when the market will reverse. Even when China's market retreated 6% last week the US market increased over 100 points the next day. In February when China's market was down 5% the US market dropped over the 500 points the two days day after this event.

HEDGING - The Only to Fully Protect Your Trading Balances and Accumulated Credits

I have received many emails asking how we can best protect our trading balances and accumulated gains (credits) during an event like the one that occurred in February. My credit spread trading strategy now includes hedging to protect Bull Put spread trades. I do this by buying for $75 - $200, 25-75 Put contracts on an individual NDX/SPX stock. The contracts are trading in pennies and the ones I buy only cost $1-$3 (.01-.03 cents per share) per contract. This is like buying insurance. The other costs you have to include are your trading expenses. What is really nice about these hedges is that you can re-coup your monthly costs buying these Puts and also cover any losses closing the current month Bull Put Spreads.

If the market drops 500 points, like it did in February, these Put options will rise very quickly to $5, $10, $20 or much more. You potentially have a very large return on these contracts that only cost $1-$3 each. The money I spend each month for hedges is only a small % of the total credits I earn selling Bear and Put credit spreads. I know that someday the market will drop very fast again and I will re-coup all my hedging costs. I did not have a hedge in place in February but I only had to close the SPX Bull Put trade and this debit was covered by rolling to an NDX Iron Condor in the next month. The February RUT and NDX Bull Puts trades I had in place during the drop off never had to be closed.

I have ordered and emailed my first hedge trade this weekend to subscribers. Please send me an email if you have any questions about this hedging strategy and the specific Put trade that expires in June.