Advice on hedging a position using options

Discussion in 'Options' started by nickyang07, Mar 20, 2019.


  1. You are right. Buying a put, and meanwhile, sell a covered call could help me get back the insurance fee. But I need to be really careful to write those things, though
     
    #11     Mar 20, 2019
  2. If you're confidently bullish, forget buying protective put. Sell otm call and collect premium. Still bullish sell otm put, use premium buy call for synthetic long. Then you sell stock position and sit back counting profits.
     
    #12     Mar 21, 2019
  3. ironchef

    ironchef

    Just put on a Collar to bracket your gain and loss if you are already satisfied with the gains. This is a fairly standard practice for those of us that have large company stocks or stock options.

    Talk to your broker.
     
    #13     Mar 21, 2019
  4. ETJ

    ETJ

    Are you free to trade or is by chance 144 stock? Did you buy it in the open market or is it part of a compensation scheme?
     
    #14     Mar 21, 2019
  5. I think you should buy put options, this is much better than you going for a covered call. The reason is, with covered call the best you to get is the premium this means that your profit is limited to the premium that you receive. On the other hand, if you'd buy a put option, the only lose that you might encounter in case the market grows is the premium that you paid. Otherwise, the profits are limitless.
     
    #15     Mar 22, 2019
  6. smallfil

    smallfil

    That is now a collar. Take note you are risking your stock being exercised in the event your stock moves substantially, in the money by selling the call option. If your option gets exercised, you miss on the upside!
     
    #16     Mar 25, 2019
  7. DannoXYZ

    DannoXYZ

    sorry i meant sell the long puts and purchase a closer put to raise his "stop"
     
    #17     Mar 26, 2019
  8. Epicurus

    Epicurus

    The conventional approach I believe is to use a collar, as others have outlined here.

    As an alternative, I'm wondering whether a Put Ratio Backspread would do the job.

    You'd have to play with strikes to see if its cheaper than just buying Puts (single leg).

    Benefit is unlimited upside still, you are protected from a big move down, but trade-off is exposure to loss on a smaller fall in the price.

    I don't think this strategy is normally used for hedging but might be worth testing.

    There is a bit of stuff on google. Found this link: https://www.elitetrader.com/et/threads/hedging-w-backspreads-vs-protective-puts.
     
    #18     Mar 29, 2019