Why You Need Long and Short Positions In Your Portfolio

After looking at the markets Thursday morning, I have to quote George Costanza from Seinfeld: (Episode 123 - It’s the one where George wants to name his kid Seven)

Awright, let’s just stay calm here! Don’t get all crazy on me!

For a while now I have gone completely to trading Options. If I am long a stock I will buy the Calls that expire well in the future (December or beyond if I am buying right now). If I am short a stock even then I will buy PUTS that expire well in the future, just in case. Occasionally, I will buy short term PUTS. At worst, buy some cheap PUTS (low Delta) to protect your long positions.

At the time when I am down on all my long positions, the shorts have come in and saved the day. Anyway’s, in these tough times I have been able to grow my portfolio by shorting the following stocks in the last few weeks:

* First Solar (FSLR) (Finally, I was burned until now but I stayed with it)
* Sunpower (SPWR)
* Jarden (JAH) (Thanks Amit Chokshi)
* Amazon (AMZN)
* Nokia (NOK)
* SiRF (SIRF) (To protect my long position)
* Jones Soda (JSDA) (To protect my long position)

I still own PUTS on First Solar (sold some of my PUTS) but sold PUTS on Sunpower, Amazon and Nokia a little early.

My longs positions are all suffering right now but my shorts protected me from this disaster. I wished I would have shorted more Alternative Energy stocks since I wrote this article. There are quality alternative energy companies out there once the dust settles but I’ll leave that for another article.

Full Disclosure: I am Short First Solar and Long SiRF and Jones Soda.