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Winner: 19.70% Gain On SPY Puts

Sep. 04, 2020 10:14 AM ETSPDR® S&P 500 ETF Trust (SPY)
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  • Bought the SPY 20NOV20 338 put options no Aug 11, Aug 24, Aug 27  and Sep 2 for an average cost of $13.20.
  • Sold the puts on Sep 3 at $15.80 for a gain of 19.70% on the trade.
  • 8% portfolio allocation.

Bought the initial put position on Aug 11 when my Momentum Burst Indicator flashed bearish - this turned out to be a bear trap as the index popped the next day. 

Added to the puts on Aug 24 when the RSI14 entered overbought territory at 72.25. But the index kept climbing. 

Added my third tranche of puts on Aug 27 when the RSI14 hit 77.31 - even more overbought - but the index just kept climbing. 

Added my last tranche of puts on Sep 2 when the RSI14 hit 82.90 and the price climbed above the Upper Limit Line of the linear regression model. 

On Sep 3 the price bubble finally burst and I locked in my gains on the trade. 

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Analyst's Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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