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There are other strategies to protect long positions if you have cash or an appetite for risk, this allows you to realize the gains from holding during the enti
by buttcoinslol 9y ago
There are other strategies to protect long positions if you have cash or an appetite for risk, this allows you to realize the gains from holding during the entire runup.
It does require a good exit strategy for whatever hedge you choose.
- krrrh 9y agoDo you want to list some of the ones you’re thinking of? I’m trying to level up on hedging strategies for retail investors. I was thinking of buying VIX on Friday, and am kicking myself for missing out now.
- buttcoinslol 9y agoThere are a range of ETFs that aim to have inverse daily returns to different things. I bought some SPXU, which aims to offer 3x the inverse daily return of the S&P 500. It works for this use case, betting that the S&P will fall. There are risks to using leverage, and inverse ETFs are meant for short term bets (a few days at most).
- nodesocket 9y agoCurious what instrument you were going to buy the VIX through? $VXX? $VXX was only up (coughing) 33% while the CBOE VIX was/is up nearly 100+ %.
- krrrh 9y agoI hadn't looked into all the options to be honest, VXX was on my radar. So was TVIX[1], but figuring out how to optimize decaying short-term bets like these felt like too much for a non-expert. I'm certain there are smarter and less risky ways to hedge a market that seems overbought. [1] https://sixfigureinvesting.com/2015/10/how-does-tvix-work/ https://sixfigureinvesting.com/2015/10/how-does-tvix-work/
- justinsaccount 9y agoSell calls against long stock positions. If you're really scared, use the credits on the calls to buy further out puts.
- rmrm 9y agoYou can also just buy puts. Puts on SPY increase in value as SP500 declines.