Trading Sell off in SPX

[monkey180]

Hi,

Trying to construct a strategy to trade sell off / corrections in the SPX / SPY.

Say SP is at 2000, after a 100 point sell off from 2100. And you go long

You could purchase a Call Option for say 50 delta 0.50

SP moves down to 1990, option then worth $45. Sell the option back, and take the $5 loss

You could then also short the SPX so that the $5 is got back. And if the SPX goes high enough, can exercise and make back premium and the short SPX loss, with profit over all.


Any other combinations or suggestions much appreciated.

THanks

 

[mb325]

Hi,

Trying to construct a strategy to trade sell off / corrections in the SPX / SPY.

Say SP is at 2000, after a 100 point sell off from 2100. And you go long

You could purchase a Call Option for say 50 delta 0.50

SP moves down to 1990, option then worth $45. Sell the option back, and take the $5 loss

I kind of follow you down to this point, but then you lose me:

You could then also short the SPX so that the $5 is got back. So you've sold out of the option at a $5 loss and now selling the future at 1990?And if the SPX goes high enough, can exercise you said you sold the option? and make back premium and the short SPX loss, with profit over all.


Any other combinations or suggestions much appreciated.

THanks

.