Hi all,
I’ve been trading LEAPS for the last couple of years and am up +300% this year. ( only mentioning to point out that I'm an aggressive trader, I know this growth isn’t sustainable. )
100% of my port are deep ITM LEAPS (.70 Delta +, 365 DTE). I mainly trade high beta growth stocks (NBIS, RKLB, ASTS).
LEAPs have been working well for me but I do see large drawdowns during corrections and pullbacks (my port dropped to +180% from +300% the past 2 months but has now nearly rebounded). So I’m looking to add a lot more emphasis on hedging to reduce volatility during these events.
Open to all feedback, my strategy is below:
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I want to hedge my high-beta exposure using QLD ETF puts (.70 Delta +, 120 DTE with intention to sell within 60-90 days as most corrections last 1-2 months). Here's my reasoning:
**Underlying:**
* QLD is a 2x QQQ leverage ETF which corresponds well with my stock selection and would directly counter my LEAPS exposure during pullbacks.
**Entry:**
Wait for clear bearish macro confluence across multiple macro indicators
* High Greed on the CNN Fear and greed index
* VIX index spikes above 25
* Global supply chain pressure
* Fed Rates increasing
* SMA cross overs on SPY/ QQQ/ my stock selection
Aiming to place my puts as soon as soon as these signals show up
**Post-Entry:**
**If the pullback hits:** Ride the puts down as my LEAPS take a temporary hit. Once QLD reaches major technical support (usually 30-60 days, hovering above the 200 SMA), sell 100% of the puts and lock in gains.
**If the market rips:** Sell puts after 1-2 weeks of confirmation. My LEAPS will outrun the put losses.
**If the market stays flat:** If 2-3 weeks pass with QLD trading sideways, cut the puts and take the loss on the slight theta decay, which shouldn't be much since these puts are mostly intrinsic value (0.70+ Delta).
**Hedge sizing:** 10%-15% of my entire port, and only using them during macro corrections.
Open to all thoughts.