How to Hedge TQQQ
Hi All-
Sorry if I missed this in the other thread, but I couldn’t find it so figured I’d ask. For those of you doing the TQQQ strategy, how do you hedge it? I read about TQQQ/TMF but don’t like this idea since TMF will be sensitive to rising interest rates (I don’t think it’s likely to rise a lot since then the US won’t be able to service its debt but if I’m wrong here then TQQQ/TMF could be bad for me). Thanks for your help
Sell covered calls or buy QYLD
Cash
https://old.reddit.com/r/LETFs/comments/qyudeo/nearfuture_problem_for_h…
Rising rates has occurred before and is included in normal HFEA backtesting.
Buy value stocks to hedge (financials, energy, tourism etc.) highly decorrelated and cheaper than buying puts
Buy stocks to hedge?
Crazy world
Thank you guys for the comments, very helpful. One more question is what % allocation would you recommend between TQQQ and the hedge, and how often to rebalance?
TMF is the best hedge by far. Works far better than cash as well. Hikes are largely priced in. You can’t really be concerned with day to day movements,
Thanks for this, TQQQ/TMF is the strategy I read about, I think they backtested it since the early 80s manually for the periods before TQQQ existed. If there was a sustained period of rising rates though, wouldn't that theoretically make both of these slowly decline together? My concern is that this type of environment wasn't covered in the backtest
I can't speak to TQQQ as a I prefer UPRO (although both shouldn't be far off from one another pretty high correlation nevertheless). Rate hikes don't really impact TMF that way. You can look at periods of steady rate increases like 2016-2019 and TMF performed well. It's more so to do with the EXPECATION of rate increases. Heck, if rates increase but by less than the EXPECTED amount TMF will actually go up. At the end of the day, there's no better hedge for this. Arguably, you could have the funds in stablecoin yields or something but when it comes time to rebalance on a big pullback it will take time for you to transfer that money back over to a broker whereas you can instantly sell and buy day of within your broker. TMF is just also a safer bet for the long term by far.
Off topic. This is the only ETF I have ever seen advertise itself during TV commercials on basic TV channels.
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Can’t you buy mid-long term puts periodically to hedge tail risk? It would work like insurance.
Sounds like an easy way to lose money tbh.. have to get the timing and direction right, at the same time
Assuming you want to build a long position and will DCA, puts seem to be the simplest to execute. I think it’s too broad to hedge otherwise, but interested to hear what others have to say.
What about SQQQ then shifting to TQQQ during a dip? Volatility drag may get you harder on SQQQ
technically on paper it would make sense but the opportunity cost of just using the money of buying SQQQ could just be used to buy more tqqq during the dips, SQQQ would make sense if theoretically there was no max amount of $ that you could invest at any given point
How’s everyone doing, still holding strong? We’ve been getting destroyed these past 2 weeks, I don’t even want to sign into Mint haha
Hedging it by avoiding it like a plague
Or play devils advocate and short it
“Markets can stay irrational longer than you can stay solvent."
Reason why I punt leveraged ETFs
Luckily I have saved about ~50% cash to take advantage of a crash, and being down ~30% on my other 50% I invested, I’m not sure when to put in the rest of the cash! :D
short tsla
Watch for the SPY 200 SMA to fall today or next week. That will be your cue to rotate out of TQQQ.
Took all of a few hours. Good call
Sell when it's down 35%, good idea. When should I buy back in? At the tippity tip top of the next cycle?
Years of TQQQ gains can get wiped out in a few short months if markets break down temporarily, so yeah, it is good to rotate out when significant long-term technical support breaks down like the S&P 500 200-day moving average.
calls for AT&T
Well team, I’m down ~35% since I went into HFEA earlier this year, and my TQQQ from October which was up 40% a month ago is now at a loss :) time to average down? I’ve got 50% cash left to deploy but not sure when to go in!
What are your TQQQ/UPRO/TMF splits, and cash?
I bought more TQQQ on the dip today
I just started HFEA in a M1 account with some play dollars today so we'll see how that goes. Just going UPRO/TMF but considering adding TQQQ.
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