Using a 'bear put spread' to hedge against further market declines

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Mike Khouw gives an update on his option market hedge.

I'll review some of the reasons why the stock market is getting hit and update a hedge trade I use during market turbulence. On July 1st, I recommended hedging a "most unusual" election year. It's gotten a lot more unusual since then, and that hedge is paying off — hugely. The S & P 500 5,350 puts I discussed are trading nearly $170 as I write this, up ~ $12,000 per contract. This is even though the S & P 500 is down only 2.

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Click here for the full disclaimer.This energy stock is set for a breakout with oil on the rise again. How to play it with options

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