To The Moon

😱 Markets wobble on Israel–Iran headlines—Sell, Hedge, or Buy the Dip?

Overnight, SPY fell ≈ 1.5 % and QQQ about 1 %. The “fear gauge” VIX jumped past 16. Is this the long-awaited pullback or just another headline shake-out?

How these shocks usually play out

Typical pattern: Geopolitical scares knock the S&P down 2–3 % in a few days, then it often recovers within two weeks—so long as earnings and the economy stay firm.

Key milestone: SPY's 50-day average sits near $590. Staying above it has kept recent dips shallow.

Bigger worry: When VIX sticks above 22; that's when sell-offs tend to deepen.

Want a little downside protection?

1. Inverse ETF “umbrella” – SDS climbs roughly 2 % when the S&P drops 1 %. Good for short-term cover.

2. Low-cost put spread – Buy a June SPX 5600 put, sell a 5400 put to cap both risk and cost.

3. Set an expiry date – Options and inverse ETFs leak value; close them once the storm passes.

Eyeing a dip-buy instead?

Energy ETF (XLE) – Benefits if oil stays bid on Middle-East tension.

Healthcare ETF (XLV) – A “defensive” pocket that holds up when nerves fray.

AI leaders (NVDA, SMCI) – Market favourites usually spring back first.

Quick decision guide:

If SPY > $590 and VIX < 18:

• Nibble on Energy (XLE) and Healthcare (XLV) ETFs.

If SPY < $590 or VIX between 18–22:

• Add a small hedge—think SDS or that SPX put spread.

If VIX > 22:

• Keep hedges on and hold off new buys until volatility cools.

What I'm doing

Small starter hedge in SDS (~0.5 % of portfolio).

Working the 5600/5400 SPX put spread if premiums stay reasonable.

Ready to buy XLV if it flips green near $144.