# Puts on SPY? (Betting on a market collapse)



## Immolatus (Feb 20, 2011)

I am thinking of the best way to hedge or just bet on a massive downturn. I feel I have to buy at least a few massively out of the time/money puts on the SPY.
Thoughts?
If you could actually get these for $75 (Jun 14 at 100 in case the link doesnt work), this seems like the best bet for the money.
Marcus I'd love to hear what you got if you dont mind posting it. If you do, no prob!


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## partdeux (Aug 3, 2011)

tough betting against central bank manipulation. There are a LOT of technical signals suggesting an imminent fall.


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## Marcus (May 13, 2012)

I went with Jan 14 $150 Puts figuring a modest 10% drop in the S&P would make them in the money.

One of the major things I look for when purchasing or selling options is the open interest. A higher open interest means the bid/ask spread is usually lower and it's a more liquid market. The issue I have with your choice is the thin market with only 67 contracts open and the last trade was May 16th.

If you were to select Jan 14 $100 or $95 Puts, the open interest is 32K and 56K respectively. The price is also a third to a fourth of the Jun 14 $100.
The Jan 15 Puts (LEAPS) aren't yet high enough volume or open interest options IMHO.
Looking at strictly the Jan 14 Puts, everything from $100 to $150 in $5 increment strike prices looks tradeable. You want a decent volume (>100 contracts/day) and an open interest of more than 10K contracts. There's also a few oddball strikes that meet my criteria within that range.

I'll be reloading on the next up market day though probably at a lower strike price. I suggest you might wish to wait until then too and let the volatility ease a bit.


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## Immolatus (Feb 20, 2011)

Hmmm. Thanks for the input, that all makes sense. I am looking for cheap and way out of the money options, so I was only looking at that criteria. I also just realized that Ameritrade is seriously limited on the options front, at least in the ones they will show on the site. They wont show any on SPY, and limited ones on DIA. I'll have to call them tomorrow to find out if all of the options listed on CBOE are even available to trade.


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## Immolatus (Feb 20, 2011)

Put in an order for Dec 14 @90 for $1.06 just now. Honestly, I'd rather be wrong and have these expire worthless.


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## Marcus (May 13, 2012)

As you can well imagine, today was a good day for me. Last week, I screwed up and got greedy and ended up losing out on a $2K profit on my puts. Turns out I could've sold out and bought back the same options for a little less than I had in them. So I missed out on one iteration. Oh well, you live and learn. 

I also left a bit on the table today since I sold out early even though I figured the indices would continue to fall. It's more of a pigs get fat, hogs get slaughtered type of thing (see above for my lesson about this.)
For my Jan 14 $130 puts, I ended up making a 23.88% return in less than 2 weeks.
For my Jan 14 $140 puts, I make 21.17% in less than 2 weeks.
For my Jan 14 $151 puts, I made 8.8% in less than 2 weeks. (I screwed up and got the $151 instead of the $150 by mistake.)

BTW Immolatus, you're up nearly 30% before commissions so I hope you take some off the table.

I'll be looking towards Tuesday as my reload day unless the market bounces back before then.


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## Immolatus (Feb 20, 2011)

Oh, I wish.
I couldnt get those filled, as it was dropping the whole time I was trying to get them in and there was no volume (lesson learned), although 100 got sold at that price on the same day and there was no room for small timers like me. I was also very busy at work, and I cant exactly sit and watch the market at all, much less check stuff even every hour. 
Congrats to you on yours!
I bought Dec 2014 @$80 for $85 each, so I'm still even. I'm in it for the big one. I didnt have enough cash in the account for any real amount so I could only get a few, I been paying down a lot of debt for the last year and made a really nice purchase which I will post as soon as the paperwork goes through...
And I have to save up for a ring. Think she'll check if its real? "No babe, no need for insurance on this puppy"
:rofl:


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