We have been saying the last few sessions that we feel as if this market was overbought. Today was a good example of how little it takes to drive the market down. This market is moving little with the news lately, a sure sign of complete indecision. That is why you really have to be able to take advantage of both sides of the markets in these uncertain times.
We made just one move in the market today. We took on a short position of 100 shares of Nike Inc. (NYSE:NKE).Our sense was this market would most likely sell-off in the afternoon, so we wanted to capture a position that might have some downward momentum going into tomorrow’s earnings report. Along with shorting 100 shares we purchased a July 75 call option for protection. We limited our total exposure to 3.9% on this particular trade. With an earnings report tomorrow we thought better of taking too much of a bite on this trade. If we have a weak day on the stock tomorrow, a poor earnings report after hours may prove to be very profitable for us!
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Disclosure: No positions