This hedge will provide us with long-term protection against a major drawdown of 10% or more and will also help mitigate a Black Swan event. Additionally, it will serve to reduce the Buying Power (BP) requirement in the account.

This trade can be partially funded by distributions from BIL and other trades. Although hedges come at a cost and there are various ways to pay for them, I am willing to allocate up to 6% of my account's annual revenue for hedging.

Trade Mechanics

• Aiming to spend 0.5% of Net Liq over 60 days (0.25% per month)
• Enter a new trade on the first of every month
• Ladder 2 hedges running at a time
• 0.5% a month is 6% a year
• Goal is to limit the losses of a 10% market drawdown and cover at least 100% of all /ES NPs at a 2X Max Loss with a 20% Implied Volatility (IV) increase

Trade Entry

• Aim for 60 DTE
• Aim to add near the start of every month
• Using 4 contracts, look for a strike that will cost around 0.5% of Net Liq

Trade Management

• Let expire worthless
• Close for a loss if market direction indicates
• Take profit over 400%