On CNBC's "Options Action," Mike Khouw suggested that investors should consider using options to hedge a long position that behaves like SPDR S&P 500 ETF Trust SPY.
See Also: Carter Worth And Mike Khouw's Estée Lauder Trade
Khouw wants to buy the July $400 put for $7.65 and he would finance the purchase by selling the July $435 call for $3.65 and the July $375 put for $3. In case SPY trades lower, Khouw would have protection between $400 and $375. With the sale of the call, he is limiting his upside to $435 or 4.24% above SPY's closing price on Friday.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.