When you wake up next Wednesday it will be over. The constant he said, she said, the name calling, the falsehoods. I’m not talking about Keeping Up With the Real America’s Next Top Trader. I am referring the Presidential Election. You might not like the outcome, but I have a feeling most people will be glad this election cycle is over.
I’m not one to “play” big events often. I believe that news, events, data, etc., are usually somewhat priced into the market. Elections can be a bit different, especially when the outcome is not certain. An election in question can give markets jitters. From my perspective I think those jitters are to the downside.
I am going to keep things simple and buy a bear put spread. I like buying the E-Mini S&P 500 Week 2 2050-2010 put spread at 8 points ($400.00) or better. The spread has a maximum potential of 40 points if both strikes are in the money on expiration on November 11th. I am setting an initial target exit at 30 points. Risk is defined to the cost of entry plus fees and commissions. Being long the spread gives us the ability to participate in a possible volatile market with limited exposure. If the market stabilizes post election, or rallies, I would try to limit a loss to 4 points. Don’t forget to get out and vote.