October 3, 2023
Sell a Third of Existing Position: Sell a Third of Your Financials ETF (XLF) March 33 Puts for $1.65 or More.
I think the Financials look dreadful. So why are we taking profits of approximately 20% on this position? To be honest it’s a tough call. This is what I mean …
On the one hand, as noted above, the Financials, and the action under the surface of the market, look bad. For that reason, I should hold my full put position.
On the other hand, my system has always been to take partial profits at set levels, and then step back and evaluate the trade. For that reason, and because the market may be “due” for a bounce (though no guarantee), let’s sell a small piece of our XLF puts today.
To execute this trade you need to:
Sell to Close a Third of Your XLF March 33 Puts
This sale of a piece of one of our two hedges, the QQQ puts being our other bearish position, will push the portfolio a touch more bullish.
Please note, if you feel your portfolio needs a full hedge, you can choose to hold the entire position.
August 22, 2023
Buy the Financials ETF (XLF) March 33 Puts (exp. 3/15/2024) for $1.60 or less.
Put-buying activity is picking up steam in the financials yet again and many of those stocks look on the verge of breaking down. Here is some of that put-buying activity from this morning/early afternoon:
Buyer of 8,000 Charles Schwab (SCHW) October 55 Puts for $1.75 – Stock at 58
Buyer of 10,000 Charles Schwab (SCHW) September 50 Puts for $0.37 – Stock at 56.75
Buyer of 2,500 Capital One (COF) November 100 Puts for $5.75 – Stock at 101.5
Buyer of 2,500 Zion Bancorp (ZION) January 15 Puts for $0.55 – Stock at 33
This is just a small sample of the bearish option activity, which then triggered me to look for a put buy to also play a move lower in the financials. This leads me to the Financials ETF (XLF), where we could buy a put with six months until its expiration for a very reasonable price.
To execute this trade you need to:
Buy to Open the XLF March 33 Puts
The most you can lose on this trade is the premium paid, or $160 per put purchased.
Stepping back, hopefully, the financials don’t fall apart again as that would almost surely mean bad things are happening in the economy and the market.
However, to pay $1.60 for six months of protection, in a sector that is seeing big put-buying activity is a no-brainer in my opinion.
| Position (Original) | XLF March 33 Put |
| Position Strategy | Buy Put |
| Opened Date | August 22, 2022 |
| Expiration | March 15, 2024 |
| Net Price | 1.42 |
| Strike | 33 |
