With markets coiling, ready to break out one way or the other, and VIX dropping below 50 (45.54 now), I am considering a bearish option position, e.g. with UYG at 6.15 -- buy Jan 09 6 put @ 0.80 buy Jan09 8 call @ 0.30 Comments? With bearish bias, what alternatives for UYG ?
To be truthful that is not a bearish position but rather a neutral on in the form of a strangle. That is the approach if you think we are coiling and could break out either way. If you want to be bearish just buy the puts but in general you might be better off looking at XLE than UYG to reduce the leverage in the ETF.
Don't want to go totally naked, want some protection if XLF spikes up to 14 or 15 then drops to below 11