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Options guy: History says sell-off to be modest

S&P stock index options traders
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It's the end of the world as we know it (and I feel fine.) R.E.M.

Last week brought more of the same stresses that are hanging over the market, such as what will happen when the Fed raises rates, oil prices falling, and liquidity, credit concerns rattling the high-yield bond market.

Fortunately for readers of this column, the hedging recommendation we made (the SPDR S&P 500 ETF Trust June $209/February $188 put spread) did serve as a bit of a cushion for those who used it.

The June $209 puts are about $15.70 and the February $188s are $3.35. So the package, which we recommended at $9.35 is now worth $12.35 a week later.

One of the important things to remember about hedging is that one may need to adjust the trade from time to time. Several factors can affect our decision of whether and how to adjust our hedges including the amount of time remaining until expiration, our market view, and of course the market's movement.

Here's what I recommend now...