Another V-shaped recovery, Grade C-

Stock market moves almost straight after a brief bear market. I feel like my trading is below average, because I am now slightly behind SPY and QQQ for 2025. Grade C-

I did some put debit spreads to hedge a bit. Both hedges expired worthless, costing me about 0.9% of the portfolio. MSFT rocketed higher on earnings and I covered some sold calls for a huge percentage loss. Those factors contribute to me now trailing the indexes.

It demonstrates why and how hedging is difficult. I paid 0.9% for a minor hedge for about two months, which basically turned into drag. Of course if I knew we would recover from the bear lows so quickly, I wouldn’t need to hedge. I can find some comfort in staying mostly long. Having the hedge gave me confidence to keep my other longs.

Here are a few ETFs year-to-date:

GLD gold 21.5%
SLV silver 11.3%
EEM emerging mkt 10.6%

QQQ Nasdaq 100 2.0%
SPY SP500 1.4%

TLT US20 yr -1.2%
IWM Russell 2000 -5.0%

My trading account up 1.1%, so I am slightly behind. I am going to be traveling next month, so trading may be limited. The market continues to be treacherous. United Healthcare was a super blue chip a couple months ago. UNH lost over half its value in a few months. That’s why diversification and risk management is vital for those with a decent account size.

Is it all puppies and rainbows now? Seems unlikely, but the 2025 lows are likely good support if we see another leg down. Still a lot of public chatter about risk in the market, and it is risky. This is not a low risk time to be all-in long. So my default is back to being net long, delta hedging.

Simplest example is to own 5 shares SPY, sell a 3 delta call. The tiny premium doesn’t cushion much downside, and if the market rips higher, some upside might be lost.