Originally published October 24th 2022 [Old Format]
Trade Rationale and Plan
• Per the plan in Monday’s report, I have bought a hedge against potential P&L damage to my core Short Nasdaq 100 (c.10% position) from an aggressive risk rally through the balance of the year (called / hoped for by many) using the IBB (iShares Biotech ETF).
• Biotech is one of the few ‘long duration’ equity sectors that I like and have had an existing position in the ETF since Q2. The sector has been heavily sold off YTD but looks like it has been trying to build a base since the summer.
• My view is that the key risk period I am hedging is from now until the 3rd week of Nov (post FOMC, Mid-Terms, recommencement of buyback season). If a 10%+ rally occurs by then, I will close both this position and the NQ puts. If we get to mid-November without a risk rally emerging, I will take off the protection.
