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Winner: 49.25% Gain On SPY Puts

Dec. 03, 2021 7:29 PM ETSPDR® S&P 500 ETF Trust (SPY)
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  • Bought the SPY 21JAN22 460 puts on Nov 30 at $14.52.
  • Sold the puts on Dec 3 at $21.67 for a gain of 49.24% on the trade.
  • 3% portfolio allocation.

I bought the SPY puts on Nov 30 after the shares had rallied up to the 13EMA and then reversed lower - all three of my indicators were bearish: the MACD was bearish and falling; my Hulk Indicator was bearish (black price bar); and the RSI was below 50. 

But this was the second day in a very volatile and rocky week for the markets. On Dec 1 the markets rallied in the morning, with the index once again moving up to the 13EMA - but it then sold off hard in the afternoon, and closed just above the 4,500 support level - I stayed in the trade because of the strong bearish reversal day - but the next day the index rallied 1.42% and closed just below the 4,600 level - the 4,500 support level had held and buyers stepped back in. 

On Dec 3 the index opened higher, but a combination of a strong sell-off in Chinese companies (DIDI, NIO, XPEV, JD, PDD) caused by the announcement that DIDI would be delisting in the US , and the 42% drop in DOCU after earnings, which caused most tech specs and even some big tech to sell off hard, caused the index to sell-off. 

But in the midst of all this selling, the 4,500 support level still held - this is why I decided to sell my puts and book my gains. There was no way to know whether the selling would continue into Monday or whether buyers would step back in to buy some of the spec tech and big tech names that sold off - in this market environment it is best to book the gains when you see them - they can be gone the very next day. 

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