So a few of weeks ago I picked up some downside protection in the form of inverse index ETFs and some puts on the SPX expiring this week. The puts are up about 30% right now but that could change dramatically depending on what happens with the Fed today. So I'm looking at a few options (pun intended):
1) Just hold and see what happens. If the market drops on the Fed news, I gain more; if the market rebounds, I can sell the options for a small gain or small loss depending on the move.
2) Sell the options before the Fed announcement and take the 30% profit.
3) Hold but add some call options as a hedge. If the market rebounds, I sell the puts for a small gain or loss and then ride the rebound on the calls; if the market tanks, I sell the calls for a loss but gain a bit more on the puts. Which I then sell because they expire on Friday.
Thoughts?
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