Election Day.

Are you ready?

Do you have all your “ducks in a row?”

[ad#Google Adsense 336×280-IA]Are you swinging for the fences with your candidate and at the same time preparing for the worst?

When it comes to your portfolio, or positioning for the “day after” and what might happen, you need to get your ducks lined up and make sure your hopeful dreams don’t turn into your worst nightmare.

Today, I’m going to give you two stocks I’m buying right now… just in case.

Here’s what to you need to know…

A Nightmare Scenario Could Be Building

As far as the markets, a nightmare scenario isn’t out of the question. In fact, it’s more than just possible.

It’s not that equities traded down for seven consecutive days that’s worrisome, after all; we’re still so close to all-time highs.

It’s not that net earnings are probably going to fall again this quarter, marking seven straight quarterly drops, because after all, we’re still so close to all-time highs.

It’s not that the Fed is seeing stronger wage growth in a tightening labor market and is likely to raise rates in December that’s worrisome, because we’re so close to all-time highs.

In fact, nothing should be that worrisome for the markets, including this election, because after all, we’re still so close to all-time highs.

Unless of course you’re worried precisely because we’re so close to all-time highs.

I am.

What we need to worry about is profit-taking, precisely because we’re so close to all-time highs.

There’s a lot of money sitting on the table, which could get wiped off if election jitters turn to profit-taking, which forces traders and investors to the exit doors to actually book their paper profits, all at the same time.

With a lot of negatives hanging in the background, and the markets so close to all-time highs, some are starting to believe they’re close to turning the corner and leaving all the bad news behind and just flat-out discounting lingering doubts all the way to higher all-time highs and then some.

But not many folks are thinking that way. And that’s what is worrying me the most.

The election could be the sell trigger that gets a negative feedback loop churning.

So it makes sense to expect the unexpected and be prepared for what could be a nightmare scenario.

Last week, I recommended buying volatility, expecting it to ratchet up – if not soar – in the event of widespread, panicky selling.

I also recommended straddling the market by buying calls on a market-based ETF and buying calls on an inverse market-based ETF. I prefer buying calls because puts have been somewhat overpriced lately as investors increasingly edge into them for election protection.

Here are two stocks I think could skyrocket if things get ugly on Tuesday…

Old Standbys: Gold and Guns

It’s no secret that certain stocks do well when times get tough.

Two of the best security plays you can make right now are in two old standbys: gold and guns.

In my paid services, we just put on a smart gold play.

I like Barrick Gold Corp. (NYSE: ABX) here as a gold price play. And because Barrick’s been cleaning up itself and selling off underperforming assets, it’s in much better shape as a mining play than it’s been in a few years.

But instead of just buying Barrick outright, I had subscribers buy calls and sell puts a few strike prices apart. We effectively paid less than $0.10 for what amounts to a bet that gold will pop if there’s any post-election rush into safe harbor assets.

By selling puts to offset the price of the calls we want, we could end up having to buy Barrick shares if gold tanks and Barrick shares fall. We’d get assigned on the puts we sold and have to buy stock.

But that’s fine because we like owning Barrick outright anyway. And if you’re worried about what’s going to happen – with the election, or the markets, or both, it’s something that you might want to get into. Owning a gold position on the cheap to profit from any rush into gold harbor assets if equities sell off makes perfect sense.

We also bought into gun manufacturer Sturm Ruger & Co. Inc. (NYSE: RGR), taking a position in the stock for the long term, with a cheap hedge for the short term and some extra leverage in case the stock pops.

And it certainly could. After all, no matter who wins, if there’s panic in the streets, gun sales will skyrocket.

Why am I telling you what we’re doing in my newsletter services? Because there are times when sharing sensible positions that will protect you if our nightmares come true is just the right thing to offer.

— Shah Gilani

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Source: Money Morning