Crude is off 22% this morning, with futures halted limit down. Our hedge positions are dampening the drawdown that we’ve seen for the past two weeks, as the S&P 500 and US Indices search for support. SQQQ and SPXU are printing higher highs this morning, as we wait for futures to open. Patience.
SQQQ SPXU Hedge
These hedge positions are rising this morning. If these highs are maintained through the opening range we’ll consider rolling our premium out another month to help capture this increasing volatility.
We are currently short 04/17 SQQQ 23C (4.60 avg) as we sold the covered calls (rolled up from 20) on Friday. We’ll look to do this again as a higher strike in April or May, depending on the prices offered this morning.
SPXU is following the same path higher, with futures halted limit down.
Last time markets were limit down – AUG 2015
“At 9:30, SPY opened for regular trading hours at 5.2% below its previous day’s close and then further declined to a daily low of 7.8% by 9:35. By 9:40, SPY recovered past its opening price and eventually closed down 4.2%. SPY’s decline from the previous day close to August 24 open was the second largest in the last decade, while SPY’s decline from previous day close to August 24 daily low was the 10th largest in the last decade” – SEC
We’ll keep our hedges in place until the markets find a floor. Those positions are SPXU, SQQQ, TLT, AGG, GDX, gold and bond funds for now.
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Happy Trading,
Vinny
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