Election Hedges

E

ET180

Over the fast few days, I have been feeling pretty comfortable with my positioning. However, I decided to add / increase my positioning by a small amount as a last-minute hedge. I'm hedging a Biden win by doing the following trades:

1. Added to UUP short
2. Added to FXI long (bought shares, sold 47.5 strike Nov calls)
3. Added to EEM long (bought shares, sold 47.5 strike Nov calls)
4. Added to INDA long (bought shares, sold 36 strike Dec calls)

I think a Biden win especially with Dem control of senate will lead to a much weaker dollar long term. China will be the biggest beneficiary of a Biden win so adding exposure there. These are all small positions. My equity exposure is still reduced probably lower than it should be and I'm not making any big bets given the uncertainty. I view these as a hedge more than speculation as I hope I'm wrong on the outcome. But long term, I feel confident they are good positions to have regardless of the election outcome and plan to hold for a while.

To hedge Trump win (I have not put on any of these trades):

1. Long financials (WFC / BAC) and energy (XOM), no brainer
2. Short solar
3. Long QQQ / S&P
 
You are talking positions > 1 month out. For the immediate term:

Might long ZB in the overnight session depending on the results coming in. ES short is also a possibility. Not too many options in the overnight session.
 
I was net long in my core portfolio so I shorted some ES futures. Fully hedged because I hate overnight surprises. Better to miss out on a gain than take a big beating.
 
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