Tackle Today: Portfolio Protection Principles | Tackle Trading

Tackle Trading
5 min readJul 2, 2021


≈ Protection and Puts≈


We’ve looked at two situations where you don’t need portfolio protection. Now, let’s analyze one where you do.

Let’s say you own stock or ETF positions with the intent of holding them for multiple years. The only way it’s possible to keep something for that long is by not using a stop loss. Otherwise, you’ll get shaken out along the way.

Here’s a helpful exercise. Look at the ten-year history of whatever stock/ETF you’re going to buy. Count how many times it corrected more than 10% along the way. My bet is you had multiple drawdowns exceeding 30%. Some may have even fallen 50% at some point. Each one of those episodes knocked out all the trades who had stop losses.

On the one hand, the stops did their jobs by potentially preventing more significant drawdowns. But, on the other hand, they made it impossible to hold on for bigger gains that were had over the long run.

If I can’t use a stop loss when investing, but I don’t want to experience a decline greater than, say, -15% along the way, then what can I do?

Buy protective puts.

Minimizing how much downside you experience makes it easier to commit to your position and truly let it ride for the long run.

Next time, we’ll look at strike selection and cost considerations.


Chart of the Day

Canadian Solar (CSIQ)

CSIQ made it on last week’s Options Report list as a bullish breakout candidate. Now, we have a lovely bull retracement giving those who missed the breakout a chance to buy the dip. Watch for signs of a reversal to form in the coming days and confirm that a support pivot is forming.

Video of the day

Jedi Options

Coach Tyler analyzes the bullish move in Canadian Solar this week $CSIQ, and examines two separate ways to trade it in the options market — the Bull Put Spread v. the Bull Call Spread — n this clip from Wednesday’s Halftime Report

Traders Lounge 11 AM EST

Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.

Halftime Report 12:30 PM EST

The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day and fun in a way that only Matt and Tim can deliver.

At the Closing Bell 3:00 PM EST

Join Mark Justice each Friday as he covered the world of commodities and takes questions at the closing bell of the market.

Financial freedom is a journey

The Tackle Today series is brought to you by Tackle Trading.

Sign up now and gain unfettered access to all of the quality content and powerful Scouting Reports that our Pro Members enjoy for 15-days absolutely free with no strings attached and let us show you what your trading has been missing.

Legal Disclaimer

Tackle Trading LLC (“Tackle Trading”) is providing this website and any related materials, including newsletters, blog posts, videos, social media postings and any other communications (collectively, the “Materials”) on an “as-is” basis. This means that although Tackle Trading strives to make the information accurate, thorough and current, neither Tackle Trading nor the author(s) of the Materials or the moderators guarantee or warrant the Materials or accept liability for any damage, loss or expense arising from the use of the Materials, whether based in tort, contract, or otherwise. Tackle Trading is providing the Materials for educational purposes only. We are not providing legal, accounting, or financial advisory services, and this is not a solicitation or recommendation to buy or sell any stocks, options, or other financial instruments or investments. Examples that address specific assets, stocks, options or other financial instrument transactions are for illustrative purposes only and are not intended to represent specific trades or transactions that we have conducted. In fact, for the purpose of illustration, we may use examples that are different from or contrary to transactions we have conducted or positions we hold. Furthermore, this website and any information or training herein are not intended as a solicitation for any future relationship, business or otherwise, between the users and the moderators. No express or implied warranties are being made with respect to these services and products. By using the Materials, each user agrees to indemnify and hold Tackle Trading harmless from all losses, expenses and costs, including reasonable attorneys’ fees, arising out of or resulting from user’s use of the Materials. In no event shall Tackle Trading or the author(s) or moderators be liable for any direct, special, consequential or incidental damages arising out of or related to the Materials. If this limitation on damages is not enforceable in some states, the total amount of Tackle Trading’s liability to the user or others shall not exceed the amount paid by the user for such Materials.

All investing and trading in the securities market involves a high degree of risk. Any decisions to place trades in the financial markets, including trading in stocks, options or other financial instruments, is a personal decision that should only be made after conducting thorough independent research, including a personal risk and financial assessment, and prior consultation with the user’s investment, legal, tax and accounting advisers, to determine whether such trading or investment is appropriate for that user.

Originally published at https://tackletrading.com on July 2, 2021.