RIVN - How To Profitably Hedge With Put Options
2024-06-17 08:51:16 ET
Summary
- Buying cheap put options on horrible stocks to hedge long positions can be profitable.
- Put options offer unlimited gains and limited losses compared to short positions, making them a possibly better hedge.
- Selecting the right stocks to buy put options on is key, and I offer some things to look for.
At the beginning of 2022 I hit on a better way than going short to hedge my long positions: buying cheap put options on stocks I expected to tank. Following this strategy was very profitable at first, since 2022 and 2023 presented an ideal market for it.
The strategy isn't as complicated as most options strategies. I buy low-priced medium-range out-of-the-money puts on a select group of stocks that I deem worthless. I then hold them until the week prior to expiration, with a few minor exceptions.
In this article, I'm going to......
How To Profitably Hedge With Put Options