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The --- H.E.A.T. Formula Hedging Playbook THE DAILY --- H.E.A.T. Torching Wall Street’s Obsolete Playbook. Delivered straight to your inbox 5 days a week. Subscribe Home Posts The --- H.E.A.T. Formula Hedging Playbook The --- H.E.A.T. Formula Hedging Playbook Oct 13, 2025 Wall Street’s 60/40 formula was born in 1952 — the same year as the first credit card. A lot has changed since. That’s why we created a new approach — The --- H.E.A.T. Formula — to empower investors to spot opportunities, think independently, make smarter (often contrarian) moves, and build real wealth. Table of Contents 🔥 Here’s What’s Happening Now Why Covered Call ETFs Suck-And What To Do Instead 🛡️ The --- H.E.A.T. Formula Hedging Playbook ⚖️ 1. Ratio Put Spreads — The Smart Speculative He … 🧯 2. SPY Put Spreads — Classic Capital-Protected … 🌋 3. VIX Call Ratio Spreads — Long Vol, Not Long … 💣 4. VIX Call Spreads — Low-Risk Vol Hedge 🧨 5. ARKK Puts / Short Calls — Hedge the Hype Option 1: Long Puts Option 2: Short OTM Calls 🧠 Summary Grid 📬 --- In Case You Missed It 🤝 Before You Go Some Ways I Can Help 🔥 Here’s What’s Happening Now In Friday’s note we talked about rare earths, then this happened…. Trump to Hit China With Additional 100% Tariff, Citing Restrictions on Rare-Earth Elements President also says he will impose new export controls on critical software in response to Beijing’s moves www.wsj.com/politics/policy/trump-china-tariffs-rare-earths-xi-meeting-8053c81a?mod=hp_lead_pos1 I gave my thoughts to the Schwab Network later in the day….. — # (# ) The market has been going up in pretty much a straight line, and as much money as Trump is making you (you should be following the Trump’s Inner Circle playbook) you know that every once in a while he’s going to throw a monkey wrench into things. We pretty much have the playbook for this from earlier in the year…… That’s pretty much what we are seeing this morning as we look to be getting half of Friday’s move back. Remember though, prior Friday’s move a bunch of areas where already looking toppy. We pointed out homebuilders as a potential short last week….. But there were a number of other areas we could have pointed out as well. So, while I do think dips should be bought, and I did a bit on Friday, I think you ought to be cautious up here. I also saw a lot of stories like this on my feed over the weekend. So I decided to make today’s newsletter about hedging (below)…. — # (# ) The move in crypto was especially interesting…. Bitcoin is pulling an undercut and rally at the 200 day… Ethereum is looking to get back over the 10 day… — # (# ) Why Covered Call ETFs Suck-And What To Do Instead Thursday October 23rd 2-3PM EST Covered call ETFs are everywhere — and everyone thinks they’ve found a “safe” way to collect yield in a sideways market. The truth? Most of them suck. They cap your upside, mislead investors with “yield” that’s really your own money coming back , and often trail just owning the stock by a mile. Join me for a brutally honest breakdown of how these funds actually work — and what you should be doing instead. What You’ll Learn: 🔥 Why “high yield” covered call ETFs are often just returning your own capital 📉 How most call-writing strategies quietly destroy compounding 🚫 Why owning covered calls in bull markets is like running a marathon in a weighted vest 💡 The simple structure that can fix these problems — and where the real daily income opportunities are hiding Click Here To Register register.gotowebinar.com/register/223734574050559064 🛡️ The --- H.E.A.T. Formula Hedging Playbook ❝ Hedging isn’t about being bearish. It’s about staying dangerous when the rest of the market panics. I hope to have OHNO out in January. It will follow many elements of the strategies I am describing below with a whole lot more sophistication to it. In the meantime, this is how I would hedge your portfolio. I believe you should have a static hedge, the amount depends on your own taste. Bonds are not a hedge, they did offer some protection on Friday but they don’t always work. For something to be a hedge it has to go up every time the market goes down. I would suggest ramping your hedges up when the odds are not in your favor. I often compare trading and investing to poker and blackjack. In cards you bet more when the odds are in your favor and you fold or bet less when they aren’t. You can learn to do the same in markets. Beyond the scope of this newsletter today, but perhaps I’ll do a webinar on it at some point. ⚖️ 1. Ratio Put Spreads — The Smart Speculative Hedge ❝ Sell ATM. Buy 2 OTM. Designed to win big if the market really drops, but breakeven or better if it rips higher. Example (SPY or QQQ): Sell 1 SPY ATM put Buy 2 SPY OTM puts Structure for $0 net debit or small credit 🎯 Best Case: SPY dumps to below you OTM puts 💥 Worst Case: SPY closes around or in between your puts (flat/down a little), where loss is highest. 📈 Upside: SPY rallies → all of your puts expire worthless, if the trade was for a credit you keep the credit, it if was breakeven then you breakeven. This is not a gentle hedge —this is for when you think we nuke . ✅ Great on: SPY, QQQ, IWM 🧠 Use smaller size than typical put spreads—it’s a sharp tool, not a sledgehammer. 🧯 2. SPY Put Spreads — Classic Capital-Protected Hedge ❝ Simple. Defined risk. Still works. Example (QQQ): Buy 1 QQQ ATM put Sell 1 QQQ OTM put Net debit ~1.00–1.50% No fancy payoff curve here. Just a reliable band of protection if markets slip. Tighten the strikes if vol is rich or stretch them wider if you want tail protection. ✔️ Use for hedging into known catalysts 🧪 Pair with long equity to keep core exposure 🌋 3. VIX Call Ratio Spreads — Long Vol, Not Long Bleed ❝ Same logic as equity ratio spreads—just inverted. Example: Sell 1 VIX ITM call Buy 2 VIX OTM calls You want zero cost or small credit going in. If VIX explodes you print . 💡 Why it works: Most people buy VIX calls and get destroyed on decay. You structure a better entry and only get paid when vol really spikes. The cool thing about a VIX ratio spread is that in a panic the VIX can really spike. In this case a small spread could expand and protect a much larger part of your portfolio. 💣 4. VIX Call Spreads — Low-Risk Vol Hedge ❝ When vol is crushed and nobody expects anything bad. Example: Buy 1 VIX ITM C / Sell 1 VIX OTM C Debit ~0.60–0.75 Defined risk. Decent reward. This is your insurance trade for war, rate shock, or market puke. 🧨 5. ARKK Puts / Short Calls — Hedge the Hype ❝ When the bubble pops, ARKK is your canary. Option 1: Long Puts Great for directional plays during broad tech re-rating Cheap way to hedge speculative beta (vs. just shorting QQQ) Option 2: Short OTM Calls Sell weekly calls 5–7% above spot ARKK often fails to hold rallies, making this a great vol-harvesting play 🧠 Summary Grid Strategy Best For Risk/Reward Ideal Use Ratio Put Spread Tail hedging w/ optionality 🟧 Asymmetric Low vol, directional edge SPY/QQQ Put Spread Core hedge 🟨 Defined General protection VIX Call Ratio Cheap tail vol 🟧 Asymmetric Vol spike setups VIX Call Spread Simpler vol hedge 🟨 Defined Macro event hedge ARKK Puts/Calls Bubble hedge 🟥 Speculative Tech unwinds, sentiment fades 📬 --- In Case You Missed It Be a while before I can launch this, but preview of coming attractions….. Tuttle Capital Permanent Portfolio 2.0 ETF www.streetinsider.com/SEC+Filings/Form+485APOS+ETF+Opportunities+Trust/25445496.html 🤝 Before You Go Some Ways I Can Help ETFs : The Antidote to Wall Street Inside HEAT: Our Monthly Live Call on What Wall Street Doesn’t Want You To Know Financial HEAT Podcast https://www.youtube.com/@TuttleCap Freedom from the Wall Street Hypocrisy Tuttle Wealth Management: Your Wealth Unleashed Advanced HEAT Insights: Matt’s Inner Circle, Your Financial Edge All rights reserved. Keep Reading No posts found View more caret-right 0