XLK - Feb.'18 Exp. Put Vertical Debit Spread (Hedge)
66/61 Put Vertical Credit Spread @ $1.82
Prob. of Max Profit = 4.90%
Prob. of Max Loss = 29.12%
Break-even @ $64.18
Straight up hedge against technology sector/semiconductor industry ( NVDA + AMAT long put credit spread positions - both are linked below).
Feb.'18 expiration chosen to focus on Feb.'18 reports for both NVDA and AMAT in case of strong downward plunge in technology sector.
Trade approaches 50/50 play from this point on since break-even price is the same as close price for the day.
Expecting spread to expire worthless if price falls between break-even & $61.00 by expiration, but will take early profit (and re-establish position if necessary) if there is an early move to ~$62.85 level.
Due to break out of expected range early in trade (debit spreads will do this a lot, so adjustments should always be expected & possible before placing trade).
65/60 Put Vertical Credit @ 0.53
Converted XLK Vertical Debit Hedge into XLK Iron Condor
Adjustment into 66/65/61/60 Iron Condor Debit Spread @ $1.29 (0.53)
29% reduction in Max Loss.
Expecting to reduce loss even further IF price falls between $66 and $60 by expiration.