Tackle Today: This is How You Play Defense
December 16, 2022
«3 Ways to Reduce Exposure.»
Traders,
Coach Tyler here. This week’s swoon officially turned the daily trend of all major U.S. indexes lower. In a bear market, you ignore support breaks at your peril. Yesterday, I suggested dusting off the bear playbook and playing defense.
Playing defense means reducing the risk or exposure in your portfolio. There are many ways to do this.
- Exit some old bull trades that no longer look as rosy as when you first entered.
- Adjust or hedge existing bullish positions. Sell or roll down covered calls on stock positions. Sell calls or bear calls against short puts or bull puts.
- Enter new bear trades to ratchet your exposure down further.
Each trader must decide to what extent they respond when trends turn and support breaks. Experience has taught me that getting smaller early in the rollover (i.e., yesterday because it was the first support break) gives you far more flexibility in the late stages of a downtrend or selloff when it makes sense to add back exposure.
You can’t get big at the end of a downturn if you don’t get small at the beginning.
Video Of The Day: Gino’s Gems – How to use the Average True Range indicator (ATR)
In today’s Gino’s Gems, Coach Gino teaches how to use the Average True Range indicator (ATR).
Chart of the Day: Russell 2000 ETF (IWM)
Small-Caps cracked support and are now below all major moving averages. This isn’t bullish.
Options Theory Blog
IWM Bull Put Strategy
This is part two of a two-part video explaining the similarities and differences between selling IWM naked puts and bull puts on a monthly basis.
Today’s line up
Traders Lounge 11 AM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
Cash Flow Club Replay
If you missed last night’s webinar where Coach Greg Holmes talked about Credit Spreads or would like to watch it again, check it out here.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.
Women In Trading Mastermind Group 8:30 PM EST
Once a month we’ll be hosting a live webinar featuring Women In Trading with Coach Emily. Get in the game!
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