SPY 7/15 expiration, vertical put spread, expired worthlessly

action

On 6/24 I entered into a SPY put vertical spread with 7/15 expiration. The spread consisted of a long leg of 17 contracts with strike $199.00 bought for $2.50, and a short leg of 17 contracts with strike $183.50 bought for 59¢. That spread has now expired worthlessly. Total loss including commission is $3,288.40. Loss per share after commission is $1.93 (In case of ratio’ed spreads, I always calculate per share profit/loss based on the size of the more expensive leg).

rationale

This was the second expensive hedge of the year I had (was allowed to?) close with a substantial loss. I entered this position right after the Brexit vote. This was, in hindsight, the worst time to be looking for protection, as the market almost instantly recovered from the initial shock.

At the time, I would have felt reckless had I not added some protection. But I am growing frustrated with the substantial costs of hedging. In the future, I will be looking for less costly ways to gain some downside protection.

July 18, 2016 at 2:40pm · SPY · sold to close · options · expiration · vertical


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