How to Hedge Your Portfolio With ETFs

by | May 6, 2022 | Stocks

“Roger, how do I protect my stock portfolio from volatility?”

It’s the main question everyone has been asking me this past week with us being smack dab in the middle of earnings season, and as the Federal Reserve raised interest rates by another half percentage point. 

I get it because some traders might still be holding stocks they’re not ready to get rid of just yet… 

So don’t worry. 

While no solution is foolproof, I have found a few simple but effective ways to hedge your portfolio right now… 

Ways to Hedge Your Portfolio From Recent Volatility 

Let’s say we’re in a long position (this is for example purposes only, by the way) on the Dow Jones Industrial Average (INDEXDJX: DJI) and we’re afraid that it is about to fall off the cliff, or trade downward. 

One way to hedge your portfolio would be to sell shares of the ProShares Ultra Dow30 (NYSEArca: DDM), a leveraged ETF that delivers two times the daily performance of the Dow. 

So for every share you own of the Dow, this is like having two. 

In other words, if we owned 500 shares of DJI, we’d only need to sell short about 250 shares of DDM in order to hedge ourselves.  

Now, there are a lot of different ways to hedge your portfolio. I’m not going to get into the specifics of what amount you need to hedge and so forth. That’s something you need to determine based on your own trading account and goals. 

However, we could go ahead and protect ourselves by short selling shares of DDM in this example… 

But let’s say you don’t like to trade to the short side… 

Well, I’ve also got you covered with the ProShares Short Dow30 (NYSEArca: DOG)

Check out my short video to learn a few different ways to hedge your portfolio in the current market environment. 

Don’t forget to like and subscribe to our YouTube channel if you haven’t already so you can be notified as soon as we post our next video, and see what other trade opportunities we’re paying close attention to! 

P.S. Wednesday was the day when some of the most influential people in the United States made a big-time decision…  

And it’s moving the markets in a massive way.

But after Wednesday, who’s to say whether things will go up or down… So how do we position ourselves to win when we don’t know the direction? 

It’s all about creating a perfect hedge that’ll withstand whatever the market throws at us. That means being long the strongest horse, and short the weakest.

Get the details here! 

 

WRITTEN BY<br>Roger Scott

WRITTEN BY
Roger Scott

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