OK, time for a Hedge ahead of the Fed.
In our 5% Portfolio (OOP) we still have that DIA Nov $165/170 bull call spread and DIA is up at $167 and the $165 calls are $6.50, which is more than the max they would pay on the spread. The Dow is up at 16,750 and could easily pop back to 17,500 so almost 5%, which would be $175.35 on DIA.
So we have to consider that as a potential bad outcome if we cash out now but, in context, the spread is currently $4,275 with a potential for $7,500 if DIA is over $170 come November. We want to be bearish ahead of the Fed so we could take $6.50 x 15 contracts = $9,750 off the table and that means that unless we get burned for more than $5,475 to the upside, we come out ahead of the game.
$5,475/15 contracts is $3.65 per contract so DIA would have to be over $173.65 before we start losing money - up 3.6% from here. That's not likely to happen in a single day, so I think going this way may be easier than doing a new SDS spread.
Since we already have a lot of bullish positions, we can expect BID, IRBT, TASR and CCJ to do well in a rally but GLD may go lower (but it's small, so no big deal) and RJET is their own little thing with the contract talks.
It's risky but I like it so let's cash our 15 DIA Nov $164 calls for $6.50 ($9,750) in the OOP and then we're well-hedged into the Fed.
In our Short-Term Portfolio, let's buy back the 50 TZA Oct $14 short calls (0.22) and that puts us quite a bit more bearish for just $1,100 and we sold them for 0.75 so we're up $2,650 anyway - that's what I call CHEAP protection!
