SPY Bull Put Expiration and Insurance Purchases

Around July 8, SPY fell below $205, threatening the short strike of $202. Along with the threats for the XLE bull put spreads in the portfolio, I decided to purchase some insurance to mitigate some risks. I analyzed the SPY chart and felt there might be a short term descending triangle pattern as shown below. Thus I bought 2 SPY Aug21 $198 put for $2.74 triggered at SPY below $205.06.

I used a spreadsheet to calculate my entry, stop and target points, as well as the reward to risk ration as shown below. In the end, this pattern failed and I sold the put at $1.2 after SPY gapped up on July 13. The insurance loss was $174 x 2 = $348. Thus the July SPY position had a minor loss $12 (=348 - 6 x 56) after SPY puts expired worthless yesterday.

Short Stock	Price
ATR	2.19
Swing low/Breakout	205.28
Resistance	208.02
Trade Trigger - Below prior day low by 10% ATR	205.061
Entry limit order - Buy stop limit at 10% ATR below trigger	204.842
Initial Stop - Sell stop market is higher value of (1) 0.1 ATR above resistance, (2) Trigger price + ATR	208.239
Price to set break-even stop - equal Entry limit - (Initial Stop -Buy stop limit) - Drop new BE stop after a new swing high of 5 days+ is made	201.445
Target - Lower horizontal support - Range % within down trend line in last 5 weeks - Sell half & Trailing another half at 0.1 ATR above prior swing high or break-even - Sell last half at new target based on new pattern or larger time pattern (whichever is closer)	198.5263
Reward/Risk ratio - Must be greater than 2	1.8592028

In the meantime, the XLE was also moving against my position after my adjustment last time. Since I have a larger position on XLE, I felt safer to insure for this position in order to reduce risk. It looked to me that USO was falling faster than XLE. So I decided to use USO put for the insurance to trade its low base break down pattern. My order was triggered on Friday as USO fell below $16.97. I bought 4 USO Aug21 $18 puts for $1.36. I plan to sell the puts if USO rises above $17.97 by setting a GTC conditional order for stop loss. My other trade management rules are shown in the table below. If XLE continues to show weakness, I might have to add more insurance to limit overall risks. Due to the high level of risked capital for XLE, I’m withholding any new entries in case I need additional capital for another round of adjustment.

Short Stock	Price
ATR	0.58
Swing low/Breakout	17.03
Resistance	17.91
Trade Trigger - Below prior day low by 10% ATR	16.972
Entry limit order - Buy stop limit at 10% ATR below trigger	16.914
Initial Stop - Sell stop market is higher value of (1) 0.1 ATR above resistance, (2) Trigger price + ATR	17.968
Price to set break-even stop - equal Entry limit - (Initial Stop -Buy stop limit) - Drop new BE stop after a new swing high of 5 days+ is made	15.86
Target - Lower horizontal support - Range % within down trend line in last 5 weeks - Sell half & Trailing another half at 0.1 ATR above prior swing high or break-even - Sell last half at new target based on new pattern or larger time pattern (whichever is closer)	14.08381
Reward/Risk ratio - Must be greater than 2	2.6851898