NASDAQ-100 Trading Action slightly Raises the Potential Risk of a bear market

The strategy is to look at our positions now and then increase our put exposure in a way that it would off-set any losses sustained in a bear market.

We then use rallies in Nvidia to sell covered calls. Those covered calls would pay for the puts we purchased.

For example, in Lannister, we own the Nvidia December 2025 $100 Puts that expire in about 11-months. Those puts would do well in a bear market. We own 2 contracts in that position.

However, the problem is that we own 4 contracts in the Nvidia Dec 2026 $90 calls at $43.80 (cost-basis) which are trading at $53.27 today. They’re up 22% despite Nvidia’s recent big sell-off.

Now the puts would off-set losses sustained to our $90 calls for sure. we paid about $17,520 for the $90 call options. On a crash to $70 by say July 2025, they’d trade at around $20.00. We’d make about $4,000 in those puts.

The $17,520 cost-basis would lose about $8,000. We’d off-set about half the loss sustained.

It’s not enough. we need to increase our put exposure by about double to fully offset the potential loss of a bear market. To double our exposure, it would only cost us about $2,000. we recently just made $4,000 from selling covered calls ahead of this correction.

So we could buy $2,000 worth no problem. That extra $2,000 in protection would produce an extra $4,000 in a crash down to $70 . That would fully off-set a loss sustained in the Dec 2026 $90 calls. What’s more, we’d then be able to sell those puts and use the capital to increase our long exposure so that when the next rally starts, we’re holding a massive long postion in Nvidia at a very low cost-basis.

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Furthermore, we not only own the $90 calls in Nvidia in the Lannister portfolio, but we also own a $7k position in the NVDL. We recently made about $500 selling covered calls against the NVDL which would off-set any hedge we purchased for it.

I think the way to hedge the NVDL would be the same way we’d hedge the $90 calls. They’d react in much the same way except NVDL does’t have an expiration.

So we might simply add yet another $2k position to hedge out the NVDL.

We have the capital in the portfolio to do that now. If we tripled our current put position to $6k (from $42) that would likely off-set any loss sustained in NVDA and the Nvidia $90 calls in a bear market.

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Now consider this. Suppose we don’t enter a bear market. Suppose instead, NVDA rallies to $170 as we expect. If that happens, we make $23,000 in our Nvidia long positions minimum from here on top of the $3k we’ve already made. So $26k total.

The puts go to $0.00 leading to a $6k loss in the puts. that would be off-set in the covered calls we’d sell in the process. Just to give you an idea, in only this correction alone, we made about $2200 in selling covered calls against our long position. so we could very easily off-set the total insurance cost. It just takes a few well timed sales of covered calls. Like when we sold the January $170 calls against our Nvidia $90 calls in December. we collected $4.25 x 4 contracts = $1700 on that one trade.

THIS RIGHT HERE is way to be thinking about how we position for both outcomes. The lesson here is to always thinking about how to insure our positions. Especially after a big profit run. The way we did it with Arryn and the QQQ.