I’m looking for some guidance on using SPY puts as a hedge or insurance for my portfolio. My situation:
Portfolio size: ~$400K, mostly equities, highly correlated with the S&P 500.
Goal: Protect against a significant market downturn over the next few months.
Approach: Considering buying SPY puts.
Questions:
What strike price and expiration would you recommend for effective protection without overspending on premiums?
Should I go with at-the-money (ATM) puts for full coverage or slightly out-of-the-money (OTM) for a cheaper hedge?
Is a 90-day expiration reasonable, or should I stick to monthly rolls?
Any alternative strategies (like collars or put spreads) that might be more cost-efficient?
I understand this is insurance and will cost something, but I’d like to balance protection with reasonable expense. Any insights or examples from your experience would be greatly appreciated!
Thanks in advance.
Portfolio size: ~$400K, mostly equities, highly correlated with the S&P 500.
Goal: Protect against a significant market downturn over the next few months.
Approach: Considering buying SPY puts.
Questions:
What strike price and expiration would you recommend for effective protection without overspending on premiums?
Should I go with at-the-money (ATM) puts for full coverage or slightly out-of-the-money (OTM) for a cheaper hedge?
Is a 90-day expiration reasonable, or should I stick to monthly rolls?
Any alternative strategies (like collars or put spreads) that might be more cost-efficient?
I understand this is insurance and will cost something, but I’d like to balance protection with reasonable expense. Any insights or examples from your experience would be greatly appreciated!
Thanks in advance.
Statistics: Posted by manuvns — Fri Jan 02, 2026 8:27 am — Replies 0 — Views 10