On Friday, after Roku Inc. (ROKU) plunged 23%, Cathie Wood’s ARK Investments bought ROKU shares in a few of its ETFs, including its flagship Ark Innovation ETF (ARKK).
So far, that has proven to be a smart move, as ROKU shares have regained most of their losses from last Friday. One advantage of hedging in this context is it enables investors to weather volatility without feeling they need to immediately exit. They can wait to see if their stock recovers, confident in the knowledge that their downside risk will be strictly limited if it doesn’t.
Leave a Reply