>>> It’s Wave Trader Tuesday, and we also have a couple of surprise special guests to share a brand-new viral stock scanner and more — Profit Panel starts at 2:30 PM ET <<<
When volatility picks up the way it has lately, most traders either freeze up or start guessing which direction the next big move will be.
I do something different…
I buy insurance — cheap insurance — and I do it the same way every time.
The Strategy: Deep Out-of-the-Money SPX Puts
Here’s how it works: I go out about four or five weeks on the calendar and buy S&P 500 (SPX) puts that are roughly $100 out of the money (OTM). You can usually pick these up for 60 to 80 cents, which means you’re risking maybe $300 to $400 total if you buy a handful of them.
That’s it. No complicated spreads, no exotic Greeks to manage… just straight puts positioned far enough out that they’re dirt cheap, but not so far that they’re lottery tickets.
The reason I go four or five weeks out is to stay out of the time decay. If you buy weeklies, you’re fighting theta every single day. But when you give yourself a month or so, you can sit there and see what happens over a couple of weeks without hemorrhaging all of the premium.
And here’s the payoff: If you get one of those big huge down days, those 60-cent puts can jump to $2 or $3. That’s a 3x to 4x return on your insurance…
Exactly when your long positions are getting hit the hardest.
Why I Think of This as Insurance, Not Speculation
I use this strategy for insurance more than anything. It’s not a directional bet. It’s protection.
Sure, on up days, these puts get kind of hammered —you watch them bleed a little. But that’s fine… that’s what insurance costs. When the market turns back down, all of a sudden they’re doing well again, and you’re glad you had them.
The beauty of this approach is that you’re not trying to time the exact top or predict the next crash. You’re just acknowledging that when volatility is elevated, the odds of a sharp move go up…
And you want to be covered if it goes the wrong way.
You don’t have a whole lot of risk. You’re not overcommitting capital. And you’re not sitting there stressed out every time the market dips 50 points.
You’ve got a plan, you’ve got protection, and you can trade with a clearer head.
That’s worth a lot more than $400.
Geof Smith
Geof Smith Trading
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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk.
P.S. If you’ve been ignoring Dave’s Viral Stock Scanner all this while…
You might be missing out on something truly revolutionary.
Right before you is a powerful engine that has shown the ability to scan Twitter (now X) for stocks gaining social momentum among retail traders.
This allows you to turn this momentum into cash opportunities on stocks you’d typically overlook.
Over the last three years, doing just this has helped him outperform every hedge fund on the market within that timeframe!
Of course, I can’t make absolute guarantees here…
But you’d be doing yourself a disservice if you didn’t at least take a look at what’s unfolding before your eyes.
We’ve stumbled upon a unique way to take advantage of retail hype on viral stocks.
And before you dismiss it…
See What You’d Be Passing on Right Here First
We develop tools and strategies to the best of our ability but no one can guarantee the future. There is always a risk of loss when trading. Past performance is not indicative of future results. Over the last three years, Dave was able to turn a $38k retirement account into $315,000 trading what he calls Viral Stocks on X. What you will see today are some of the best examples, and only a small fraction of the overall trades that it took to build up the account. There were smaller winners and there were losers along the way. We’ve taken Dave’s methodology and created a “Viral Stock Scanner” to help us find these opportunities automatically. Since we can not promise future returns, we are not implying that this new software system will help you see similar results to Dave. Because the new Viral Stock scanner is a tool for traders, results will vary among users. Trade at your own risk.
