SPY may experience a small pullback or range-bound movement; the speaker is not expecting a major decline but is positioning with cheap options to benefit from IV expansion if a sell-off occurs.

The gains have been incredible this year. Uh almost doubling the return of the S&P 500 which has been fantastic.

We're going to look at the S&P 500. The market is slightly green today at 18%. So, this is the S&P 500. You can see it's in the top portion of these these Bowlinger band ranges.

We've got a point of control uh fairly recently uh below the 6,900 level.

point of control uh on the more recent time frame on S&P looking at that 7500 level and then also around that 7,400 level.

So, and Fast and Easy wants to look at SPY. Okay. So, let's look at um we've got a few minutes left here. So, we're going to do we're going to look at SpaceX and we're we're going to pull up the chain.

So, let's let's assume that it's a brand new position. Doesn't matter.

Spy, Fast and Easy is asking about SPY. So, let's just take a look at SPY. I've got some downward diagonal positions on right now. Looking for a down move. Not not expecting a down move, just looking for the hedge uh for the end of the week. We just don't know what's going to happen.

But if we're looking for a bearish position, it it's relatively easy to to look at positions where we can play a very short duration. We can we can buy uh kind of cheap calendars on on spy when the VIX is so low.

So this costs 138 bucks, but in the simulator, we end up with a trade that it makes money between 763 and 738. This is not a substantial pullback by any stretch. If there is a big pullback in the IV spikes, this tent gets bigger.

Anyways, so we may see that this the stock would have to drop uh you know considerably for 60 or sorry $30 from 765 down to 731. That would increase the IV. It would be IV expansion.

Um if the stock goes up, there's IV um contraction and this could cost money, but it's limited to the amount spent. So it's a $139 bet. These can be great. This this trade can make $427.

It can make even more if the IV spikes even a little bit. Look at this. Could make 600 bucks. So that could be 4x the money. Probability of profit with a slight increase in IV is 60%.

Current probability of profit is 40%. I like to buy some of these in my account.

Now if I want to uh play the other side, I can. I can also go to the call side. This will give me a little bit of upside potential. So if we look at the the calls, we're at 765.

So maybe I think that stock's going to run up 785. I'm just looking for something cheap. So 780s I can buy for a dollar. Can I get any money for selling those uh on the on the short duration?

So the 780 I would go to this on the chain and I'm going to create a double diagonal. I'm only getting 14 cents, but still 14 cents is is not nothing when you're talking about a low a low term a low trade.

This if we don't know market direction, these can be extremely good trades. They basically don't cost a lot to hold. There's the theta decay is very very minimal. There is a little bit.

This valley is slightly low. Uh max profit is is 337 bucks. If the market sells down, you'll be happy to have these on because the IV will expand and this will become a profitable trade.

So, these are they're cheap to put on. And sometimes I just load up on a on a position like this.

Now, in this case, uh I I did it with two different um like this week, what I did with that trade was I I put on I can't remember 20 or 30 contracts on SPY and then I bought 10 contracts on Q's for the profit 10 above.

So, I play two correlated assets that are similar. So, I've got like SPY with a big profit 10 below that's huge. You know, it could make like 50 grand or something, which is nice.

If there's a nice move to the downside and it's not, it doesn't need to be a massive move to the downside. We're talking about a 2 or 3% sell-off, then this huge profit tent is there because I know if the sell-off is bigger than that, then the IV expansion is greater and those diagonals help anyways.

So, and I have hedges in place. I have black swan hedges in place anyways. So most of the time I'm really praying for a huge down move. That would be ideal. We can hit one of those every couple of years and you can get like this substantially leapfrogs your account.

That trade that I just showed you is the way to do that. It's cheap to do. So 150 bucks gives us a big profit 10.