Hedging Apple stock against macro risk

  • Posted: 17 May 2012 05:28 PM

    I’m wondering what readers use to hedge their long Apple positions against macroeconomic risks.

    My sense is that Apple fundamentals are solid, but macro shocks (e.g., Europe problems) are a risk. This seems like a particular risk for options investing given the expiration date (even for leaps).

    Sorry if this is options investing 101. My intuition tells me that targeting the hedge to the risk one is worried about (e.g., macroeconomic factors) is the least expensive way to hedge.

    In my limited research, I’ve come across ProShares UltraPro Short S&P 500 (SPXU). Buying call options on SPXU gives extra leverage.

    One downside to SPXU call options is the wide spreads (about 20% of the price). My intuition tells me there is something better, or perhaps I’m not thinking about the issue correctly.

    I apologize if this is already discussed in other posts (if so, I would love to be directed there). And sorry again if this is basic stuff- I’m relatively new to this.

    I’d be interested in any thoughts.

    [ Edited: 17 May 2012 05:39 PM by gliderplane ]      
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    Posted: 17 May 2012 05:31 PM #1

    I like index puts: DIA, SPY, or QQQ