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really all depends on the size of the fish you are using. sometimes you can go through the open mouth out the top just past the lips. leaves a lot of hook gape exposed on a big head. or if its smaller fish go through the eye sockets. If i use a giant gill head i go through the nostrils. I prefer heads over tails.
 

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When using shad 4" or smaller, I use them whole and hook them by running the hook through the eye sockets--completely, so that the shad is hanging on your line above your hook. Then hook the shad down fairly near the tail. Pull any excess line back through the eye sockets. This puts the hook point at the lowest possible place on the shad while keeping it in line with your fishing line. Also makes it harder for cats to steal the bait.
 

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I really like to fillet one side of a large shad. Cut the head off with some meat still attached to it and cut the tail fin off. You should have 3 sweet pieces of shad bait. (Two fillets with the backbone on, the other side, and a bloody head with some meat on it). If the shad was a monster or I am fishing for channels or eaters, I cut the fillets down in more pieces.

If the shad is small, I cut em in two in about the middle and cut the tail fin off because it can get in the way of a hookup. If the shad is smaller than about 4-5 inches, I hook the whole thing on. Sometimes I slice smaller shad in horizontal lines from behind the gills to the tail. I feel like the juices get out better. However, I think the bait fishes faster so it can attract fish faster, but it also water logs faster and I feel I need to change it more often.

One thing I like to do is to scale the shad with the back of my fillet knife before I chop it up.

Hope this helps. Tight lines.

Edit: Almost forgot, hook the shad in a place where you expose a lot of hookpoint and provide a clear path between the hook point and the fish's jawbone. Do not overload the cutbait on the hook. Imho, the deeper you hide the hook, the more fish you will miss.
 
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