As we head into the early innings of earnings season, this year has been off to a shaky start. With technology companies lead by an AI rally last year, they are staring down the barrel of earnings that could disappoint. Let’s discuss how traders can hedge themselves ahead of that using options. After significant multiple expansion last year, can corporate earnings play catch-up and drive revenue and EPS growth to justify the lofty valuations? In my opinion, except for Nvidia, there are almost no notable technology companies that have seen significant growth in their revenues last year, or will see significant growth within the next 6-12 months due to AI. This presents problem as consumer spending has shown signs of cracking. Admittedly, I remained very cautiously optimistic last year, with a healthy dose of skepticism and was ultimately on the wrong side of the overall trend at the end of last year. However, I do not believe that my views were incorrect. Recently the CBOE Volatility index printed a new 4-year low, and 10-year yields are flirting with 4% again. I believe now is the time to pull the trigger on a market hedge using the Invesco QQQ Trust as we head into what could be a turbulent earnings season. As both the S & P 500 and Nasdaq-100 regain their all-time highs, it has been coupled with negative divergence on both: higher highs in price, not confirmed by momentum. This is a classical sign of exhaustion and provides a higher probability of a short-term pullback. Using the QQQ ETF, which tracks the Nasdaq-100 index, I’m looking out to March and buying the $400/$370 put vertical at a $6.39 net debit. I am purchasing the March $400 puts on QQQ for $9.43. I am selling the March $370 puts on QQQ for a $3.04 credit This provides me with the ability to capture a nearly 4-to-1 risk/reward ratio on a bearish view of QQQ, while risking less than 1.5% of the ETF’s value. Risking only $639 per contract if QQQ is above $400, while making up to $2361 if QQQ is below $370 at expiration. DISCLOSURES: (None) THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.