Hedge your longs – Buy IWM puts

Hedge your longs – Buy IWM puts


  This Trade Was Closed February 12, 2012

Per my comment from Friday, I closed this trade at a profit, selling @ .61 per contract. The gap I was looking to be filled was filled, and the market ramped higher at the end of the day marking a short term market bottom.

Original Trade Post:

Today the market rallied higher at the open but was met with some heavy selling near the highs. The backing and filling that the media has been saying is due to happen looks to be underway. IWM has a gap to be filled between 82 and 81.50. If the market sells off, these put options will rise in value quickly as IV ramps up. For the record, IV at the time of this trade on the Feb 80 Puts is 24%. Chart attached shows a bearish broadening top or megaphone pattern developing in the past 5 sessions.

Trade Details

  • The Ticker:     IWM
  • Target Price: TBD per share
  • The Trade
  • Buy to Open Feb 2012 80 Puts at .48 or better
  • Trade Opened: February 8, 2012
  • Trade Closed: February 12, 2012

Chart courtesy Finviz. Click to open larger.

Additional Image Provided by eatlovetrade:


This is not investment advice. Learning Markets, LLC is not responsible for errors or omissions. Please be sure to read our disclaimer.