The insurance policy you hope never pays out, but will be glad you own when it does. Who wouldn't insure their second biggest investment outside their home?
It’s your second biggest investment outside your home. Clearly, this needs to be protected. Most investors think about downside protection after the market has already fallen. By then, it is too late — options are expensive, and fear is doing the thinking. The 80DELTA system builds protection in from the start, treating it as a permanent cost of doing business rather than something you bolt on in a panic.
SPY Put LEAPS exist for one reason: to offset losses on your SPY shares during sharp drawdowns. They gain value as the market falls, directly counterbalancing the loss in your share position. This is not a stop-loss. A stop-loss sells your shares at the worst possible time and locks in the damage. A SPY Put LEAP lets you stay fully invested through the drawdown and still participate in the recovery.
You buy long-dated SPY Put LEAPS with a strike 10–20% above the current price (in-the-money). This means they already have intrinsic value from day one — you are not buying a lottery ticket, you are buying insurance that is already partially activated.
The long expiry (target 3 years) is deliberate. Time decay is the enemy of all option buyers, and longer-dated options decay far more slowly. You are paying for slow, steady protection rather than a short-dated bet that bleeds value week by week.
In rising and flat markets, PUTs will lose value due to time decay. That is the cost of insurance. The system accepts it because being unprotected during a 2008-style crash — or even a 2025-style tariff correction — is far more expensive. During the 2025 tariff-related selloff, long-dated SPY PUTs gained approximately 150% in two months. That is the protection working exactly as designed.
SPY Put LEAPS reduce your net returns in good years. You are paying a premium for peace of mind. The allocation is sized to provide meaningful protection without dragging the portfolio down during normal market conditions. Think of it as the insurance premium on a house — it costs something every year, but you would never go without it.
You roll the SPY Put LEAPS when it reaches 1 year remaining on the expiry. Re-enter at 10–20% ITM with the furthest available expiry. This is a time-based trigger, not a market-based one. You do not try to time it — you simply maintain the protection.
Time trigger: Roll at 1 year remaining. Re-enter at 10–20% ITM, furthest expiry.
| Strike | 10–20% above current SPY price (ITM) |
| Target Expiry | 3 years (2-year minimum) |
| Allocation | 7–12% of portfolio |
| Roll Trigger | 1 year remaining → re-enter at 10–20% ITM |
During the 2025 tariff-related correction, the SPY Put LEAPS gained approximately 150% in two months. This is the protection working as designed — offsetting losses on SPY shares during sharp selloffs.
Think of it as insurance. It costs a small amount in good years but lets you sleep at night.
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