We can use this vehicle to short the stock market, since the ETF’s holdings comprise a short position against selected mid- and-large cap companies. Although the options are much too thinly traded to be of much use to us — to anyone — the approximately $10 price of the underlying shares makes it affordable even for those who trade small accounts.
I was reminded of HDGE’s usefulness recently when I received a trading advisory from Steven Jon Kaplan, whose superb market analysis at The True Contrarian has been featured by Rick’s Picks in the past (although not recently). Steven evidently has been a scale-in buyer of HDGE as it has fallen, but we may be able to improve on this approach by using the 10.04 Hidden Pivot target shown to get long (and therefore short-the-market) closer to the bottom. Accordingly, I’ll recommend bidding 10.06 for 400 shares, good-till-canceled, with an initial stop-loss at 9.89. In addition, place a day order before the opening to buy 200 shares at-the-market, stop 9.89. If the stock market is about to make an important top, this bear vehicle should bottom at or very near current levels. _______ UPDATE (April 25, 11:40 p.m. ET): Several subscribers reported taking the trade, so I’m establishing a tracking position: long 200 shares from 10.15, Monday’s opening price. For the time being, set and maintain a stop-loss at 9.99 while canceling the remainder of the trade.