Well, for the moment, it seems like the catastrophy wasn't such a catastrophy after all. The S&P 500 bounced back from the lows and came within a half dozen points of trading positive. At least it's given us a chance to take a breath.
I looked for a bull put trade on the S&P, but came up with the obstacle of there not being strike prices below 1100. So, to hell with the S&P, at least for now.
I looked at the RUT and found something interesting, not for February, but for the March cycle. Let's use a little of that "dry" powder. I still expect the market to go back and test this morning's lows -- once, maybe twice. So, the verdict is still out on February.
But March looks interesting. I know it's a long time, but the cushion is appealing and the tech stocks didn't seem to be as affected as the other sectors. So, with the RUT at about 670, for our CPTI portfolio, let's:
Sell 20 March RUT 540 puts - RUWOH
Buy 20 March RUT 530 puts - RUWOF
Credit of about $.60 ($1,200)
Net credit of $.60 ($1,200). Maintenance is $20,000. Cushion if 130 points.
If you're reluctant to trade now, I certainly understand.
Double check the option symbols before you place the trade. If you're more conservative, you might wait until the RUT comes back down and put the spread at lower strikes.
Be careful and trade smart!