Stocks are cracking support today, and it might warrant pulling in the horns. Today’s video gives you a practical guide on how to play defense or reduce your portfolio risk when a market uptrend reverses.
Video Notes
How to Play Defense When Stocks Break Support
Premise: You are responsive to the daily trend of the market in your portfolio management.
You get more bullish when stocks breaks resistance and less bullish/more bearish when stocks break support.
Play Defense = Get Small = Reduce Risk = Hedge your Positions
Point #1: S&P 500 has broken daily support. The daily uptrend has reversed. We are BELOW the 20 SMA
Assumption: My portfolio was bullish before today.
How do I go about Playing Defense?
- Exit old bull trades
- Consider the worst-looking onesConsider the short-term trades
- Consider those near profit target or slightly profitable or at breakeven
- Enter new bear trades
- Brand new ticker symbol bear trade
- Scouting Report
- Hedge on an existing bullish position
- Long 100 shares of IWM – Sell calls against it!
- Covered Call position – Roll down the covered call to bring in more premium.
- Naked Put/Bull put position – Add a bear call spread to morph into a condor
- Long call/bull call positions = these are HARD to hedge if they go against you. Easier to just exit.
- Brand new ticker symbol bear trade
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