Well I did weaken and added some index shorts, but I added longs as well. Using options, I created a straddle. A straddle is a call and a put on the same underlying security at the same price and expiration. The idea is that you benefit from a significant move in either direction. I overlapped the strikes (both puts and calls are in-the-money) in order to minimize the premium loss if there is no price movement (at the expense of needing a bigger move). But since what I am concerned about is the potential for a crash (which is a really big move), that’s OK.

Another alternative strategy I might have used is to purchase a passel of deep out-of-the-money puts. But then I would be at significant risk of losing the whole option value (if the market does not, in fact, crash, which it most likely won’t), and because of the volatility that we have experienced recently, even out-of-the-money puts are no longer inexpensive. What I’m really hoping is that the market will rally as the timing systems call for, allowing me to sell the call side of the straddle at a profit, leaving the puts still on-board for the ride back down that I expect before the fall.