Sold SPY Covered Puts

Y’all are going to think I’m crazy now.  Now that I own two SPY December 110 puts and their value is made up of more than half intrinsic value, I decided to try to make a trade on SPY October puts out of the money in an attempt at a trade on SPY not falling much more before getting a day or two rally in between.  I’m expecting a short rally within the next two weeks and will buy these puts back early as an effort to cut the cost of the first leg.

While SPY was trading at $102.98, I sold two SPY October 99 covered puts (SWGVU) for $2.55 each and received $498.50 after commissions.  SWGVU traded as high as 3.20 30 minutes later.  These are “covered puts” because I own puts at a higher strike that acts like a short position.  I’m 100% hedged on these with my other puts I own, but this eliminates the hedge I was planning with the first leg.  SPY can fall $3.00 more before I’m not taking a full profit and has another $2.50 after that to put me at break even on this trade.  If SPY tanks, I will end with a profit since I’ll collect more from the December 110 put than I paid for them minus my losses from these new October 99 puts.  If SPY closes October expiration above 99, I’ll be able to use the same original December 110 puts as a hedge against new November puts I can sell.