I was thinking of the idea of using puts on a losing stock such as Gamestop or Macy's as a way to hedge in a crash. The idea is, something like Gamestop will probably go down in the next year. However, if the market crashes it will only accelerate the decline. This means I can make money in both cases.
I believe what I'm doing is "hedging" in an inherently riskier way: making money on Gamestop or Macy's puts is risky in a bull market. This isn't like holding bonds: the shares are not guaranteed to fall. However, there likely is a better than 50% chance to make money on these puts. However, if there is a crash, the situation will be even better, and the likelihood of success will be higher.
What do you think of this strategy?
Submitted January 12, 2020 at 10:34PM by TheSkyPirate https://ift.tt/36JMjfM
