You could own the UltraShort S&P 500 ProShares ETF(SDS), which is a “double-inverse” of the S&P, meaning every time the index moves down the ETF would get double the profit. You can do the same thing with the NASDAQ by owning the UltraShort QQQ ProShares ETF (QID).
Another way to hedge is to get long the Japanese yen. The CurrencyShares Japanese Yen Trust (FXY) is the ETF that would benefit if the yen carry trade unwinds as many have predicted it will, Eric says. Also, if the Fed cuts rates, the FXY would go up as well.
Currency ETFs are often overlooked by regular investors but are actually the most-traded instruments by volume in the world, Eric says.
If you believe the dollar is going lower against the yen, the FXY is your move, Guy Adami says.
Jeff Macke wants to keep it simple. “Sell until you can’t sleep,” he says. “If you’re up all night, you’re overexposed.”
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Trader disclosure: On Aug 9 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders: Macke Owns (JWN), (INTC); Najarian Owns (GS), (AMSC); Bolling Owns (T), (BP), Gold, Silver; Bolling Owns Japanese Yen Futures