Recession is coming: Is it time to buy puts and/or go short?

No way! The time to buy puts or go short stocks was back in November, when the market was at its peak and not now, when investors are panicking en masse. Without a doubt, we’re most likely far closer to the bottom than we are to the top.

The S&P 500 is very close to its long-term mean. This means things may fall further, but they’re just as likely to rise from here. Also have on mind, bear markets often provide some of the biggest moves up in market prices. When volatility is high, it’s not unusual for stocks to move by 4-5% in just a few days. During high volatility, also option premiums are high. This makes buying puts very expensive.

This is not the best scenario to start buying puts or go short.

Sven Franssen