Best way to hedge equities with vol elevated

Discussion in 'Options' started by Lpw54, Apr 8, 2020.

  1. Lpw54

    Lpw54

    I'm looking for ideas on hedging my portfolio of stocks - I realize this should've been done in early February - with VIX still elevated at 42. Buy puts on SPY would be easiest, but obviously not cheap in this vol environment, unless vol spikes higher from here. Buying VIX calls could be another option, but I've never been able to figure out whether it's best to buy SPY puts or buy VIX calls for protection.

    I can also spread both the SPY puts and VIX calls to cheapen the cost, but that limits the amount of hedge I'll have. Would selling a SPY call spread or VIX call spread be better in this elevated vol environment? Again, the protection would be more limited.

    I could also buy puts on all of my underlying stocks and perhaps sell short-dated calls to cheapen the cost. This would require more maintenance.

    Appreciate any suggestions you might have - thanks.
     
  2. 2rosy

    2rosy

    buy inverse etf. SDS
     
  3. traider

    traider

    it's cheaper to reduce your deltas when vix is so high.
     
  4. dozu888

    dozu888

    if you are afraid, get a bank cd.

    this game aint for sissies.
     
    smallfil likes this.
  5. Handle123

    Handle123

    Can always use futures and hedge them if your stock portfolio value same or close to an Index future.
     
  6. Do you know how these are built?
     

  7. Buy calls on the stocks you already got that are a month or two out, and then sell calls that are Two times the duration of those you bought, this way if the move is severely down you will net a credit, and if its up you will also end up making money

    example, buy may 30 dollar call for 2 bucks lets say,,, sell june 30 dollar call for 3 bucks,,
    big move down you keep the dollar, big move up you make the dollar also
     

  8. You could do it on any stock i guess but doing it on your stocks you already own makes it easier to digest the moves and not too trouble some if it goes up and stops exactly at the 32 mark in the example we gave
     
  9. tonyf

    tonyf

    The cheapest and best hedge is selling stocks for cash. Full stop.
     
  10. 2rosy

    2rosy

    #10     Apr 9, 2020