NEW YORK (TheStreet) -- Cost matters in just about everything, especially when making investment decisions.

Up until last week, I was advocating buying September and December puts and writing some covered calls to help hedge portfolio downside risk.

Well, those puts have gotten very expensive, and writing covered calls generates next to no premium. So, why not turn the trade upside down and sell puts, a strategy that is typically associated with being bullish?

On Monday, after another volatile day in the market, the

State Street S&P 500 ETF

(SPY) - Get Report

closed just above $156. The December 145 puts on SPY are trading at $5 per contract, about 3% of the value of the ETF -- making it very expensive, or a great deal for the seller.

>>Also see: Cisco Refreshes its Routers>>

I'm generally bullish on the market and believe that equity prices will be 5% to 10% above current levels within a year. As such, I certainly don't mind being "put" the S&P 500 ETF 7% below current levels and being paid 3% to do so.

This trade results has three effects:

    If the markets decline by more than 7% and I'm "put" the ETF, I still benefit from the 3% premium I collected and own SPY 10% lower than anyone who bought today. The market stabilizes and trades in a tighter range. I get to keep the 3% premium and am slightly ahead. The market rallies. Same outcome as #2.

This strategy can also be executed on individual stocks which are not as volatile as the broader market (beta below 1). Investors sentiment has turned so negative that demand for portfolio protection has spiked, causing some mispricing and thereby some opportunities for astute investors.


(VZ) - Get Report

April 2014 option was just made available. With fewer than 300 days until expiration the contract represents an opportunity to achieve a higher premium than one with a closer expiration. One of the contracts has a $47 strike price and is currently being bid at $3.60. The sell-to-open put would collect the premium.

>>Also see: The Energy Credit is Still Here For 2013>>

Procter & Gamble

(PG) - Get Report



(PFE) - Get Report

also saw trading start in new options with expirations of September 21 and October 19, respectively. One PG contract has a $72.50 strike price representing a roughly 4% discount to the current trading price; PFE also has an attractive $27 strike price contract also trading at a 4% discount.

The key is to look for mispricings, which appear most prevalent in longer dated options.

At the time of publication SPY was a holding in the GMG Defensive Beta Fund and PG, VZ and PFE were holdings in separately managed accounts at GGFS.

Follow @Opursche

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

Oliver Pursche is the president of GGFS, a boutique money management firm headquartered in Suffern, NY. Pursche is in charge of all business operations and serves on the firms' Investment Committee, Executive Committee and Board of Directors. Pursche is also a co-portfolio manager of the GMG Defensive Beta Fund (MPDAX).

Over the course of his career, Pursche has had the pleasure of working for venerable firms, such as PaineWebber and Neuberger Berman, as well as taking graduate courses at the University of Pennsylvania's Wharton School of Business. Most recently, Pursche published his first book,

Immigrants: Unleashing the Economic Force at our Door


Pursche is a trilingual financial services executive with more than 20 years of industry experience. His professional focus is on improving organizational structures and efficiencies, particularly in sales and the sales & marketing area. In the case of GGFS, Pursche helped four-fold AUM and five-fold revenues, as well as double profit margins from 2005 to 2013. Pursche accomplished this mainly through sales coaching, re-engineering the marketing processes and having an absolute focus on ROI.

Pursche is a frequent guest on



Fox Business News


Bloomberg Television

. He also writes weekly columns for

The Wall Street Journal Trading Deck





The Street


Pursche serves on the Advisory Board of the Cherie Blair Foundation

, which focuses on helping women entrepreneurs around the world. He is a member of the New York City Ballet Serenade Society and a member of the Advisory Board at Gemini Fund Services.

Pursche lives in Fairfield, CT with his wife Virginia and their two dogs. For a more complete biography, visit

. Follow him on twitter @opursche