{"id":2545,"date":"2020-01-27T16:00:51","date_gmt":"2020-01-27T21:00:51","guid":{"rendered":"https:\/\/mtatradeoftheday.com\/?p=2545"},"modified":"2021-02-18T09:02:19","modified_gmt":"2021-02-18T14:02:19","slug":"how-a-well-placed-hedge-can-cover-your-a","status":"publish","type":"post","link":"https:\/\/mtatradeoftheday.com\/how-a-well-placed-hedge-can-cover-your-a\/","title":{"rendered":"Using the Invesco China Technology ETF to Play Wuhan Coronavirus Fears"},"content":{"rendered":"
As I\u2019m sure you know, the Wuhan coronavirus is slamming the global markets.<\/p>\n
The moment the markets opened this morning, the Dow dropped 450 points.<\/p>\n
This sort of downside trigger catalyst came out of nowhere. Three weeks ago, you hadn\u2019t even heard of the Wuhan coronavirus. But now it\u2019s causing a major market sell-off.<\/p>\n
This is typically how corrections take place. They\u2019re unexpected. They\u2019re sudden. And they catch everyone by surprise.<\/p>\n
That\u2019s exactly why I\u2019ve been urging you here in Trade of the Day<\/em> – and also in The War Room – to carry some downside protection.<\/p>\n On the trading floor, it\u2019s called \u201ccover you\u2019re a$$,\u201d or CYA for short.<\/p>\n Just this morning, I wrote…<\/p>\n As you know, I\u2019ve been saying for the last few weeks that this market was dramatically overextended – and that a sharp sell-off would come suddenly – and without warning. And well, today, you\u2019re seeing (what could be) the beginning of this starting to occur. This is why we\u2019ve remained hedged using QQQ puts.<\/em><\/p>\n As the markets opened dramatically lower, some War Room members (who took this hedge play) doubled their money overnight.<\/p>\n ========================<\/p>\n \u201cIn last Friday @ $1.80 out today @ $3.65.\u201d<\/strong> – Adrian<\/p>\n \u201cI have been making a killing with QQQ.\u201d<\/strong> – Rene<\/p>\n \u201cSold mine – first time winner +139.%\u201d<\/strong> – Carl S.<\/p>\n \u201cBought QQQ JAN puts @ $1.13 out @ $2.15.\u201d<\/strong> – Scott C.<\/p>\n \u201cSold some of my QQQ puts for 73% gain (thx Bryan!), Holding remainder.\u201d<\/strong> – John<\/p>\n =======================<\/p>\n Now here\u2019s the important part of today\u2019s Trade of the Day<\/em>…<\/p>\n If you missed this particular hedge play, I\u2019d like to introduce you to a new investment vehicle called the Invesco China Technology ETF<\/strong> (NYSE: CQQQ).<\/p>\n It\u2019s basically the Chinese equivalent of the PowerShares QQQ Trust here in the U.S., but it holds large cap tech stocks based in China (such as Alibaba, Baidu and NetEase).<\/p>\n This could be an even more<\/em> direct way to play Chinese virus fears.<\/p>\n <\/p>\n Action Plan:<\/strong> The precedent set from the SARS pandemic – which lasted three to four months – could keep the global markets in \u201cflight risk\u201d mode for a while.<\/p>\n If that\u2019s the case, playing the Invesco China Technology ETF short could offer you protection against more selling pressure – as the next strong support level doesn\u2019t come until around $48.50.<\/p>\n