| | How to Prepare for What the S&P 500 Will Do Next
by Brandon Chapman, CMT | It looks like the good times are rolling. The S&P 500 is testing new highs, and it's easy right now for traders to become enamored with the market and run out and buy stuff. The retail investing feeding frenzy is real, and it's no coincidence that margin debt is one of the biggest drivers of M2 money supply expansion in recent months. | For smart traders, though, the smart move is to take a measured approach, assess the market risk at various points, and to use that as an opportunity to take profits and even consider hedging. | During my Tuesday TheoChat session (which paid-up subscribers can access here), we looked at the state of the market - and how to hedge a long stock portfolio and use VIX options as a hedge. | You may be asking, "times are good - why hedge now?" | Well, I'm a big believer in the first-mover advantage - just like it says on the masthead. A good hedge is always a good idea, but some of the most powerful hedges are attractively priced right now. | But, more importantly, I'm seeing signs that volatility will return sooner, not later. Let's take a look… |
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