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SPDR S&P 500 ETF Message Board

  • silversplode silversplode Jul 10, 2014 6:23 PM Flag

    How to short this market.....without coming up short if you're wrong

    This is only going to work for those of you, who have been holding shares of quality stocks for many years.

    Short some near the money, or even in the money calls, with LEAP expirations.

    If you're like me you'll be taking some of the premium and buying some "junk" bearish ETF calls with the income, or possibly some puts on select symbols.

    I mentioned the same technique last year, and I'll mention it again now. The benefit is that you're using other traders money to take a crack at something going against the trend. The trade off, or downside, is that it can "water down" your profits.

    Valuations are getting rich, and investors are starting to get complacent, if not downright euphoric. This in the face of fundamentals that are worse than 1999 or 2007.

    You can't rule out a year or even several more years of this kind of action. Today we saw the markets open deeply lower, then rise throughout the day.

    The interesting thing is, despite rising all day, the markets still ended the day with a loss, and finished on a down note.

    So lets get back to the strategy. Being short calls against the stocks you hold long term like this can at least protect you to some extent in the face of a nasty down move. Those usually come when the bullish cheerleaders of the world consider impossible.

    Over, and out.

206.33-1.12(-0.54%)Apr 29 4:00 PMEDT