Powerful Option Strategies To Hedge For A Market Crash

追加: 2026-05-28

[00:00:05]Um, this is a a long put hedge.

[00:00:09]That was part of a trade that we put on 60 some odd days ago.

[00:00:13]Nothing to do here. It's just there for crash protection. It's a max loser already. Nothing to do there.

[00:00:19]This is a trade I put on yesterday for 30 days uh as a downside hedge. Cuz I'm a little worried that you know we're at a market top and we may start moving down. So what I did is I went to the 30-day cycle um which is now the 29-day cycle but put this on yesterday. Which is the uh quarterly expiration which is a AM expiration.

[00:00:40]And uh MES or you could do this in ES as well.

[00:00:43]They've got the same expirations. And I did this put butterfly. Very wide put butterfly for 30 days.

[00:00:51]This is the 7,067.50 and the 6,500.

[00:00:56]And if we go to the curve and analysis and zoom as far out as we can.

[00:01:04]This is this this butterfly. So we're trading up here at 70 400 or so.

[00:01:09]And if we come down to 67.50, that'd be the center of this rather wide fly.

[00:01:16]Max profit on it is uh 1,200 or so uh it'll depend on what my price was. But I mean basically I paid uh I think I paid 50 cents for $1,200 of protection. Kind of cheap.

[00:01:30]Of course 30 days out too. So I put a little time on it.

[00:01:34]Another interesting way to get some uh downside protection. This is a another way I sometimes like to play these things. Go out 60 days, maybe even 90 days in MES. You know I do a lot of my short put kind of trades at 90 days. But for this one I'll do 60 days cuz it's not really like a bullish trade. It's more of a hedge. But let's go 60 days and I'm going to buy a 16 delta put.

[00:02:03]Then I'm going to go down here around the 10 delta.

[00:02:07]I'll actually go to the nine delta to make it a nice round number, 6850 versus 6550. It's 300 points wide and then double up the two shorts. It's put ratio spread, right? It's a bullish trade. Well, no, not not this wide. This is definitely not a bullish trade.

[00:02:25]This is what this trade looks like.

[00:02:28]I'm not trying to win at all on the upside. I don't want to lose, so I want to make sure I get at least a little bit of credit.

[00:02:34]But basically, if the stock market never comes down in a big way, I break even or make a little small profit, but it's basically a nothing trade.

[00:02:43]But if it comes down into the spread here, max profit on this would be around 1,600.

[00:02:52]Well, that's some nice downside uh action there if you get a a nice grind down kind of market over the next 2 months.

[00:03:01]You got wide break evens cuz it's such a wide put debit spread as part of this ratio spread.

[00:03:06]I mean, your break even's all the way down here at 6250 or so.

[00:03:11]But you need the market to be more than 1,000 points lower in 60 days for you really start losing on the naked put component of this. But remember, the market going down is kind of what you're playing for here. That's where you stand to make some money on this trade.

[00:03:25]Now, what's the difference between this and that wide butterfly I did a minute ago? Well, obviously, we're missing a wing, right? That's the only difference between a butterfly and a a ratio spread is we lopped off one of the wings.

[00:03:37]But the real difference is that butterfly that I did, I paid a little money for it.

[00:03:43]You know, a small debit, not much of a debit, and I'm never going to get that back unless the market goes down in a big way. You know, then I'll make some money, but it's a debit that's gone the way doing this with the put ratio.

[00:03:57]The way I put it on is didn't have to put a up a debit, right? Now, like everything, there's always gimmies and gotchas. So, yeah, I don't have to put up a debit for this trade, but I do have the unlimited downside risk on the short put component, although it would take a serious event for me to have to worry about that.

[00:04:17]The big difference though between this and the butterfly is the buying power. I got to put up buying power cuz I'm carrying that short naked put. Or when you define your risk, there's no buying power. Your buying power is the debit, the small little debit you paid, and that's out of your account immediately.

[00:04:31]So, if I wanted to carry this as a hedge for the next 60 days, which I sometimes do these these wide ratio spreads kind of as downside protection. Uh, the downside is it's got a little bit of a buying buying power effect tied into it.

[00:04:45]But you get great buying power relief using the futures. So, if you're doing this in ES or MES, it's it's not a crazy big buying power on those.