Let Me Put It This Way

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Although my “short everything with a ticker symbol” strategy worked great in February and March, it is fraught with risk in this new, fake market. I have thus dialed way back on individual positions (I think I had 100 at one point) to a mere 37. I have re-entered the world of options trading, by way of simple directional bets. Here is precisely what I’ve bought:

slopechart IWM
July 17 2020 $140 puts
slopechart XLI
XLI September 18 2020 $70 puts
slopechart XLY
XLY September 18 2020 $130 puts

As you can see, these are conservative. Two of the three don’t expire until September, and they are either in the money or close to it.

The benefit, of course, is defined risk. No matter how high Powell shoves this market (since apparently he is Trump’s new campaign manager), these puts can only go to zero. The flip side, of course, is that upside is limited, although a hearty selloff would easily push these into triple-digit percentage gains.

I’ve thought long and hard about this, and I think this is the correct re-balancing of risk. As of this moment, I remain light (85%) and cautious, almost to the point of clinical paranoia. With 113 days left to expiration, these XLI and XLY puts have plenty of time to ferment.