Ideas for a "conditional" hedge

Discussion in 'Risk Management' started by bobbye, Feb 6, 2015.

  1. xandman

    xandman

    The most likely effect is that you just increase the volatility of your PnL. Directional forecasts may be binary, up or down. But the probability you assign to the move, consciously or not, varies.

    When we talk about risk, we are talking about volatility, std dev, variance or whatever measure you choose for UNCERTAINTY.

    So when do you buy insurance? Usually when insurance is cheap so you don't have a big drag on returns.
     
    #21     Feb 25, 2015