How Do We Hedge Against AI Bubble Pop?
Everyone’s talking about “the mother of all bubbles”… but few are talking about how to hedge it — without missing the final leg of the rally.
You want to stay in for the bubble gains (who doesn’t?), but a smart investor knows to keep an escape pod ready. So how do you do it?
1️⃣ Classic hedge: $SPDR S&P 500 ETF Trust(SPY)$ puts. The simplest play — long puts on market indexes like S&P 500. Tech-heavy exposure means you’re covered if the AI euphoria cracks. Costly, yes, but straightforward.
2️⃣ Volatility bets: $Cboe Volatility Index(VIX)$ calls. When panic hits, volatility spikes. VIX calls can explode in value during a crash — and they’re often cheaper than index options. The trick? Timing. VIX peaks hard, then fades fast. You’ve got to be ready to take profits early.
3️⃣ $Gold - main 2512(GCmain)$ with caution. Gold’s been on fire — maybe too much. In real crises, it often dips first (liquidity crunch, margin calls), then rallies months later. The smart move might be waiting to pick up gold futures after the first selloff, not before.
4️⃣ Macro-specific hedges. Every crash has a trigger.
If you think the Yen carry trade snaps — go long Yen options.
Trade tensions? Calls on rare earths or MP Materials.
Fed panic mode after a market crash? Bond calls might shine.
5️⃣ The “real world” hedge. “Having a stable job is your best hedge.” Fair point… but in 2025’s market? Even that’s not guaranteed.
The TL;DR version:
👉 SPY puts + VIX calls = quick crash hedge.
👉 Wait for gold after the dust settles.
👉 Layer macro plays based on the most likely Black Swan.
Are you hedging your AI longs, or riding it to the moon? 🚀💣
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After the initial shock, safe-havens like gold and long-duration Treasuries typically outperform as liquidity contracts and risk assets deflate. Accumulate gradually once the VIX normalises. Meanwhile, diversify exposure within the AI complex—shift from high-beta chipmakers to infrastructure or data-centre REITs, and maintain some cash buffer to deploy post-correction.
Ultimately, hedging is about balance: insure what you cannot afford to lose, but don’t let fear erase long-term upside. Are you positioning defensively now—or confident enough to ride the mania a little longer?
第一種方式，我會考慮用SPY看跌期權作爲保險。它的邏輯很直接——AI權重在標普500佔比高，一旦AI情緒轉冷，整個指數都會被拖下水。雖然期權成本不低，但能在大跌時迅速放大防守效果。關鍵是控制倉位，別讓對衝反而吃掉主倉收益。
第二，我會留意VIX相關產品。波動率在市場崩盤時幾乎是唯一同步上漲的資產，但節奏要拿捏得準。通常VIX衝高後會快速回落，因此我傾向於短線佈局、快速止盈，而不是長期持有。
第三個防線是黃金。雖然很多人視它爲避險首選，但我更傾向於“危機後買入”。因爲在市場初期暴跌時，黃金往往也被迫賣出換現金。等到流動性恢復、資金重回安全資產時，它纔會真正起飛。
最後，我會做一些宏觀對衝作爲補充，比如輕倉做多日元或美債，防範全球風險蔓延。總體而言，我寧願小幅犧牲部分收益，也要確保在泡沫破裂時有底氣不慌亂。對衝，其實是爲下一次反彈儲備子彈。
The main fears are in macro factors like trade tensions and potential recession. If recession doesn’t happen and the fed continues to cut rates, the AI stocks will continue to rally. I don’t think the yen carry trade will snap anytime soon too, given the dependence of Japan on US. For now, considerin the above, I would continue to hold my stocks till early next year before assessing again. I might take some profit at year end when I evaluate my portfolio for my assignments and making sure my risk is still well-managed and no single market or sector has a disproportionately large exposure.
2️⃣波动率押注：$芝加哥期权交易所波动率指数(VIX)$评级.当恐慌袭来时，波动性会飙升。VIX评级的价值可能会在崩盘期间爆炸式增长，而且它们通常比指数期权便宜。诀窍？定时。VIX高峰强劲，然后迅速消退。你必须做好尽早获利了结的准备。
如果你認爲日元套利交易快照-做多日元期權。
貿易緊張局勢？稀土或MP材料的評級。
美聯儲恐慌模式市場崩盤後？邦德·評級可能會大放異彩。
5️⃣“真實世界”對衝。“有一份穩定的工作是你最好的對衝。”說得好……但是在2025年的市場上呢？即使這樣也不能保證。
I would consider rebalancing into sectors less exposed to AI hype. These would include Healthcare, Industrials, Consumer Staples or Dividend Aristocrats.
Examples are ETFs such as $Consumer Staples Select Sector SPDR Fund(XLP)$ $Health Care Select Sector SPDR Fund(XLV)$ and $Schwab US Dividend Equity ETF(SCHD)$.
I would also watch out for sentiment shifts and monitor insider selling, earnings misses and regulatory headwinds.
If AI narratives shift from transformative to overhyped, it maybe to time to trim.
Ultimately it is important to stay nimble and exercise caution to hedge against AI Bubble Pop.
@Tiger_comments @TigerStars @CaptainTiger @TigerClub
中国限制稀土、黄金。
加密崩溃，黄金。
黄金似乎永远不会动摇...
I wouldn't buy generally hedge on index. more than 70% of the time, market goes up. Rather I would hedge overvalued stocks that occupy large position in my portfolio.
Also remember that when you buy puts, time is not on your side. need to figure out when and how long to hedge .
SPY puts and VIX calls are my core hedges. SPY puts cover broad market downside, while VIX calls can surge when fear spikes. Timing is key — I’ll take profits fast if volatility explodes. As for gold, I prefer waiting for the first liquidity dip before buying in, rather than chasing it now.
I’m also watching macro triggers like the yen carry trade or a sudden Fed pivot. Each crash is different, so flexibility matters. For now, I’m riding the AI wave — just with a parachute on my back, ready for any turbulence ahead.
@TigerStars @Tiger_comments
cannot find vix calls or spx puts
With the market so concentrated in a few mega-cap tech stocks, I'm increasing my 'dry powder' (cash/short-term Treasuries). I see this as the simplest defense against an 'AI bubble' risk, giving me preserved capital ready to buy quality assets at a steep discount if a correction hits.