With the bull market extending toward their ninth year and the summer doldrums right around the corner, equity traders may consider an inverse or bearish exchange traded fund hedge to stabilize any wobbles in their portfolios.
Despite the recent rash of politics-induced risks, like President Donald Trump’s struggles following the firing of former FBI head James Comey and reports of his administration’s links to Russia, U.S. equities remain resilient, hovering near record levels.
The CBOE Volatility Index, or so-called VIX, also reflects growing complacency in the markets with the VIX moving back toward the 10 levels after recently touching a 24-year low.
However, it is precisely during periods of calm and growing complacency that investors should consider ways to protect their portfolios if a sudden catalyst triggers a steep sell-off, which is even more worrisome especially as U.S. equities have rallied this year and are hovering near record highs. Consequently, traders should think about a portfolio hedge to diminish potential risks.
“People who do, do it too late,” Andy O’Rourke, Managing Director and Chief Marketing Officer for Direxion, told ETF Trends in a call.