S&P 500 (SPY) – Long Term Hedge – March 30th, 2020
Neutral & Hedge – SPY $253.42
The S&P 500 (SPY) found a temporary bottom last week after breaking below a major $235 support level on panic selling and thin liquidity. Recovery was swift after fiscal policy provided more than 2 trillion dollars of aid to the US economy. We expect markets to remain calmer and grind higher towards its $273 resistance and remain rangebound between these 2 levels.
SPY Trade Idea:
On CNBC’s OptionsAction show on Friday, Carter Worth’s research showed that after a strong 3-day performance, S&P historically remained neutral over the next month. This lines up with our views of the market remaining rangebound, but risks remain skewed to the downside. Expecting SPY to trade sideways but hedge long term downside exposure, Tony suggests buying an Apr 3/Sep 31 255 Call Calendar @ $16.50 Debit. As of Friday’s close, these calls were trading at $7.06 Debit.
We’ve structured this trade in OptionsPlay so you can analyze and view this trade along with the supporting technical chart at your convenience. You can also view the Options Action’s video by clicking on the following link: SPY OptionsAction Trade