Hedge using put options for a swing trading portfolio?

Discussion in 'Options' started by readyornot, Sep 19, 2021.

  1. I swing trade stocks in the S&P 500, holding any individual stock for between 1-7 days. In the event that the S&P 500 takes a nose dive, I'd like some protection. Is it worth using an S&P 500 put option to hedge my portfolio? Or is this pointless when swing trading?
     
    murray t turtle likes this.
  2. i only sell put to buy stocks at cheaper price. My experience is that I have better result selling otm put than buying stock instantly. Instant satisfaction has a price, same in stock trading.
     
    yc47ib likes this.
  3. newwurldmn

    newwurldmn

    I am a terrible stock picker and I have found that I earn more being long stocks than selling puts as a proxy for delta.
     
  4. Have better timing and understanding of your trades, and watch them like a hawk.

    Buying put options as a hedge for just 1-7 day holds would eat into whatever, meager, profits you can generate already.
    Hedge options are generally used for long term investments.
     
    Jones75 and LuckyMac like this.
  5. taowave

    taowave

    How many stocks,decent correlations??

    Vol is certainly cheap enough,can you easily afford the protection??

     
  6. Overnight

    Overnight

    You just got through telling the entire forum that longer-term DTE options are not in your wheelhouse, you do not understand using them as hedges, and all that jazz. Now you are advising that you know why buying put options for a hedge 1-7 days whatever will eat into profits?

    Either you understand this stuff or you do not.
     
  7. I'm just saying insurance costs money. And the market is all about timing and foresight.

    If you have some kind of divine intervention...and you know something major will happen...it Pays to buy that insurance contract option.
    If you buy fancy, expensive, insurance...and nothing happens...don't you feel kind of dumb in the end.

    It's easier to have conviction in a trade, and trade accordingly...rather then sitting on the fence constantly unsure, guessing, on the future and playing both sides neutrally.
     
  8. Overnight

    Overnight

    Well, look at what the index futures are doing right now. You do have a real-time feed yes?

    You have told us that you do not understand how to use options as hedges. Now you are telling us to use them at hedges? The "insurance contract option"?
     
  9. ondafringe

    ondafringe

    Let me see if I got that right:

    Don't buy health insurance unless you know you're going to get sick.
    Don't buy life insurance unless you know you're going to die.

    Ok.. got it.
     
    yc47ib and destriero like this.
  10. Well, Basically, Yes. That's the way trading the market, and options, generally works.
    This game is all about timing, understanding and foresight.

    People with this skill can get very handsomely rewarded with options.
    Imagine buying car insurance, or home fire insurance, right before those rare events happen.

    Your insurance contract/option policy will explode in value relative to the tiny premiums you paid for it.
    You don't want to go through life paying those high, luxury, premiums...and nothing happened. You will feel, basically, dumb and taken advantage of.

    In conclusion, everyone is gambling on the future. So be intelligent. Be on the Winning side of the deal equation, trade.
     
    Last edited: Sep 20, 2021
    #10     Sep 20, 2021