Yes, I've done that. However, the QQQ puts will only partially hedge your portfolio if you're in agressive tech stocks.
Here's a simple exercise to determine how much they can/will help you.
Go back over the last 5 days and do the following:
1) Note the drop in the NAZ COMP index each day
2) Note the drop in your entire managed porfolio each day.
3) Note the drop in the QQQ index each day.
From this data you should be able to determine and correlate how many puts you need to buy to hedge your portfolio perfectly, or partially.
Frankly, we've closer to the bottom than the top. Buying a few puts might be fine for a trade here, but there's more likelyhood that the bias turns flat to slightly positive vs continued extreme negative.
Based on the risk/reward ratio I see now, I'd be a careful and watchful SELLER of out of the money QQQ puts vs a buyer of OTM or even ITM QQQ puts at this juncture.
If you think the market's going to continue to go down, then buy a few, but be ready to pull them if it goes back up.
As well, since the QQQ's are so easy to short, just short the index. There's not much spread in the shares, and the options have much more. As well, the cost to buy and sell the index shares via stock vs options is less.
Good luck Jill.
Steve |
