How To Hedge a Portfolio and Make Big Gains...

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After a wild year and half, the market continues to near all-time highs despite multiple corrections and increased inflationary pressure.

While the overall trend has been bullish, many investors want to know what actions to take in the short term to protect and grow their portfolios.

Now, before I get into that, I want to say this: I don’t have a crystal ball telling me what’s going to happen next. I could wake up tomorrow to see the market down 5%, or it could rally 5% on positive news. I just don’t know.

Given this uncertainty, my best course of action is to buy protection and hedge my portfolio as much as possible. After all, I don’t want to get caught with my pants down in this kind of environment.

So, today, I thought I’d share with you some of my favorite hedging techniques for the month of July.

Just to give you an example of how lucrative hedging can be, I started buying the iShares 20-Plus Year Treasury Bond ETF (Nasdaq: TLT) the other week as a way to protect my own portfolio against market volatility.

Not only has TLT held up well against recent market jitters, but it also looked like it wanted to break out and start moving higher. So, I bought July and August calls in TLT trading anywhere from $0.90 all the way up to $1.15.

Now, keep in mind that TLT doesn’t move much. But if it moved even 0.5% or 1% in a day, I knew those calls would pay off nicely.

Well, fast-forward to this week, when I managed to sell those calls between $4.90 and $5.05!

Because TLT kept slowly moving higher, this hedge more than paid off for itself. In fact, I managed to make 325%-plus on this one trade alone!

Of course, this is just one way to hedge your portfolio.

Another course of action is to bet on electric vehicle (EV) stocks, which now look to be staging a comeback.

I personally bought Tesla Inc. (Nasdaq: TSLA) for about $600, and the stock is already trading almost $50 higher. But I’ve also been bullish on names like Nio Inc. (NYSE: NIO), XPeng Inc. (NYSE: XPEV) and Li Auto Inc. (Nasdaq: LI).

Sure, there are other EV players with skin in the game, but Chinese EVs are doing well right now — especially because they’re not trading at all-time highs. And, in my opinion, I’d rather buy stocks with room to run than overpay for stocks trading at the top.

Lastly, I’ve started selling bull/put credit spreads in travel stocks, which are pulling back due to COVID variant fears. Should these strains cause additional shutdowns, that would be horrible for the travel industry as well as the global economy.

So, I’ve taken advantage of weakness in airliners and cruise liners to sell bull/put credit spreads. Of course, if you’re not a spread trader, you could also look to buy longer-dated calls or call spreads. That’s totally up to you.

Again, these are just a few areas of the market that I’ve been profiting from recently. But should the wind start to change, I’ll be back with a whole new roster of suggestions that can help make you money.

In the meantime, let me know if you have any suggestions on what YOU want me to cover. Simply respond to this email and my next deep-dive could come from a question you ask.

Until next time,

Disclaimer & Disclosures
The information in this email is intended for informational purposes only and does not guarantee specific results as there is a high degree of risk involved with trading. Also, our traders are real traders and may have financial interests in the companies discussed. Please see our Terms and Conditions for more information.

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