Turns out the IBB puts have been a pretty decent hedge after all. I bought January IBB puts back in October to help hedge the portfolio against a major market sell-off and they have kicked in as the markets have tanked so far this year.
They expire tomorrow and with the $280 strike prices now “in the money” there’s some meat to the position despite the fact that just a few weeks ago I wrote “These puts will expire in January and it looks like I’ll be taking a loss on this hedge and will re-evaluate this position at that point.”
I’m going to go ahead and sell the rest of my IBB puts today. I’ll sell about half of my remaining IBB puts right now this morning and the rest later today, just in case the markets tank again intraday and we can capture a little more upside in the puts. I’m going to put the cash on the sidelines as we continue to use this market sell-off to increase our long exposure slowly but surely, according to our playbook.
Some of our long positions are getting to levels where I’m thinking about adding more to them, including Facebook and Netflix, but not quite yet.