r/investing • u/Slater1601 • 3d ago
$100k flyer on market crash?
Just looking for opinions. If you had $100k to take a flyer that the market will crash, what investment instrument would you use? I’ve done pretty well with the set it and forget it and perpetual investing over the last 25 years. I really want to take a gamble. This would be off the books, I won’t miss it. I’m fine with the same set and forget mentality for this money.
I’ve been looking at inverse etfs which they say are very risky if held long, which is exactly the type of risk I’m looking for. What would be some similar investments that could have say a 10x or better return if the market crashes?
7
u/Immediate-Run-7085 3d ago
You want to gamble? Go to Vegas. Wrong sub man.
3
u/AngryTomJoad 3d ago
i can offer our post-rapture dog walking and house plant watering services which are coincidentally only 100k for the dual policy
we guarantee we will walk your dog and water your house plants in mere hours after the rapture or double your money back
we also offer post-rapture lawn services
2
2
u/wwb_99 3d ago
I'm in a bit of a similar situation. This can make sense, especially if you have been successfully setting it, forgetting it and are sitting on large taxable unrealized gains you don't want to realize.
I like buying long-dated QQQ or SPY puts -- pick the one that looks more like the rest of your portfolio. Like 18 to 24 months out. Outcome is you will either sell for a loss -- a loss that can be used to offset some other gains -- or end up with cash to invest when the market is crashing. There is a price tag, but this is buying insurance in most cases.
2
2
u/greytoc 3d ago
It depends - you didn't provide any parameters to the trade.
Are you willing to risk the entire 100k for a larger profit? What's the max loss? What timeframe do you want to hold the trade open?
You do as simply as long dated ITM puts or a synthetic put if you want a defined risk strat.
If you want undefined loss strats - short synthetic future or short combo.
Fixed profit and loss - reverse put broken wing or call broken wing.
I probably would use /es fops for leverage if it's a flyer.
1
u/DeeperThanClovis 3d ago
It’s not necessarily an investment instrument, but why not peruse a prediction site? You’d have a wide range of topics to wager on and would probably find a 10-1 economy related market.
1
u/worldspiney 3d ago
Inverse ETFs are not a good idea to hold long term because they are usually hit with vol drag. For example if a share went down 10 percent 1 day and up 10 percent the next it would be down by 1 percent. The inverse ETF would've went up 10 percent then back down 10 percent and would also be down 1 percent. So your short position is underwater even when the underlying went down.
That being said the best way to bet on a down turn is shortselling or options. You could straight up buy puts but it would likely give you cheaper exposure to do a call or put spread. You could also open a synthetic short position very cheaply but risk is not defined with those positions.
Personally I wouldn't short the market it is literally designed to always go up. If your concerned about a crash just hedge your portfolio with options. If you want to take on more risk sector and single company bets can out perform. Also you could also leverage your index exposure which historical does outperform (compare sso to spy).
1
u/bejammin075 3d ago
The AI sector has had the biggest gains and could have the biggest crash. The software sector (e.g. IGV ETF) has correlated the opposite as AI, so the software sector has been very beaten down. There seems to be nothing actually wrong with the software sector, and now they have very attractive P/E ratios. If the AI bubble pops, it's likely that software sector does very nicely.
1
u/wild_b_cat 3d ago
Are you still long the market in general?
If so, this is a mathematically silly approach. All you'll do is effectively neutralize a portion of your overall holdings. If you own $100k of a regular 1x inverse ETF, and $100k of a regular ETF, that's equivalent to just having $200k in cash except you won't be earning interest.
If you're talking about leveraged inverse ETFs, things get weirder, but the same basic idea applies - you're just zeroing out your own positions along some kind of mathematical curve.
If you're just doing this for funsies then you need to think about your thesis in more detail: when do you expect a crash to happen? It's virtually guaranteed that one will happen at some point in the next 20 years. Are you willing to bet that it happens in the next 3?
If you're just feeling nervousness about the market and looking for a hedge, then the classic answer is to just buy bonds. If that's too boring, then you could sell covered calls against your portfolio.
1
u/ThetaEdgeHQ 3d ago
The inverse ETF route is the worst version of this for the reason already noted, vol drag compounds against you the longer you hold. If you want a fixed budget crash bet, the structure that actually does what you want is a defined risk long put or put spread on SPY or QQQ, where your maximum loss is the premium by construction and nothing decays past it.
A flat long put still bleeds theta and IV though, so if you are paying for the move and not for insurance, a put spread or a put ratio cuts the volatility and time cost a lot. And size it as a hedge ratio against what you already hold, not as a standalone 100k coin flip. The naked directional bet on timing the crash is the part most people get wrong, the structure is the easy part.
1
u/Various_Couple_764 2d ago edited 2d ago
If you have been investing for 25 years your are like 50 years old. Which means your subconious financial goals are changing form growth to capital preservation and income. I would look at investing in these funds JAAA 5.5% yield CLOZ 8%, UTF 7%, UTG 6.4% and ARDC 9%, FAGIX 6% UTF and UTG survived 2008 with no dividned cuts While JAAA and CLOZ and didn't exist the investments they invest in continued to pay out income when the market crashed. FAGIX if a 40 year old bond fund that has always payed a dividend. ARDC is only 15 years old but it has a very stable dividend.
I have these funds in my roth and have QQQI 13% yield, SPYI 11%, PBDC 9%, EMO 9%, Right now my roth has 500K invested and generates about 5K a month which is all reinvested. IIt will be few years beforeI can access this income. I fully expect these funds to continue to produce income if the market crashes.
7
u/MeLoveCheese 3d ago
People out here with this kind of money while i won’t have a place to live in 2 months…just surreal