Investor sentiment unequivocally is that semiconductors will continue to rally into year-end. That bullish consensus makes this former CBOT pit trader take pause, and I believe now is the time to hedge some semiconductor exposure. I want to use put options in the VanEck Semiconductor ETF to mitigate downside risk. As Nvidia CEO Jensen Huang has been on a coast-to-coast roadshow, the AI darling has hit a new all-time high of $140.89 on Thursday.
, the Dutch microchip-equipment maker. got taken to the woodshed after saying the market recovery for semiconductors will take longer than expected, sending shares sharply lower. Again, this has been offset as NVDA's CEO consistently has articulated demand is "insane." We have to wait until 11/21 for their earnings. For clarity, I am not walking away from my AI exposure, I just want to hedge and synthetically book profits as SMH is up more than 40% after rising 72% in 2023.
Kilburg owns SMH puts. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY .
Click here for the full disclaimer.Tony Zhang