It occurred to me that I’ve never really written about the four styles of bearish positions I take on in my various portfolios. I don’t have clever names for them, but off the top of my head, I’d give them the following descriptors:
- Long-term directional puts
- Very short-term large ETFs
- Overnight large ETFs
- Long-term individual shorts
I’ll characterize each of these.
Long-term directional puts – These are in my “xxx-Merrill” watch list for you premium members, and these are the underlying equities against which I have purchased puts which have at least a few months on them. They tend to be in the money (maybe about 20% to 30%) and, presently, expire no earlier than June and go out until January of next year. My goal here is big percentage profits based on a substantial move on the underlying, even if it takes months to grind out.
Very short-term large ETFs – Here are my day trades, which I don’t do very often. A few minutes ago, for instance, I shorted a huge quantity of QQQ with a tight stop and have every intention of covering it, irrespective of behavior, before the close. These are opportunistic, and I often don’t even bother putting them into a watch list.
Overnight large ETFs – This is just a different flavor of the previous one, except that I am willing to hold it overnight. For example, I shorted IWM and EWJ in size on Friday at what I considered very good prices. I covered them both early today at good profits. The position size isn’t typically as loony as the day trades, but it’s a directional play based on wh
Long-term individual shorts – Most of my positions fit this category. As I’m typing this, I’ve got 27 positions that belong in this group, versus 10 in puts, 1 in short-term large ETFs, and 0 in overnight ETFs. These are smaller positions (about 1/8th the size of the ETFs) based, usually, on good, classic patterns that hopefully will throw off good profits in a matter of weeks.
I hope this helps clarify things. In the few minutes left today, I’ll close my one “short-term large ETF” in the form of QQQs, as shown here:
