We’ve been fortunate to be very long most of the best performing big cap stocks for the last five or six years now. Those stocks have been particularly strong relative to the broader markets for the last few months and weeks too. That said, our index put hedges on DIA and QQQ are down because those two indices haven’t fallen much. We barely got started buying those index puts to hedge the portfolio, so the DIA and QQQ are an especially small position now that they’re down and getting closer to expiration.
On the other hand, our largest short, the IBB, has really worked well as a hedge and our IBB puts are now worth about double what we paid for them and our IBB short itself is proftiable by about 10%. Someone in the Trading With Cody Chat Room just posted: “I almost thought biotech was getting cheap enough…. Gild biib celg amgn…. But there is some fear right now…..”
And he’s right. There is some tangible fear in the biotech world today amongst investors and traders…
I’m going to sell about half of those IBB puts today and lock in some of those profits while keeping half the puts and all of the common stock short position in IBB.