Hedging is in your mind, you can not hedge without options

Discussion in 'Strategy Development' started by gasy, May 19, 2009.

  1. gasy


    how many of you actually believe that you can hedge SP500 and Nasdaq against each other

    or that you can hedge one stock with another

    if you believe in hedging in this way, you are as clueless about basic math as art students. You can only hedge successfully using calls and puts by sacrificing premium you pay, nothing else.

    as for why I bother teaching you people basics, I am bored to death, that's why
  2. bagg


    I'm in for this ride
  3. How about forwards, futures and swaps?
  4. gasy


    we are talking here day trading, investing and using hedge strategies will get you rich in 50 years

    day trading will get you rich in 10 year time, assuming you have the knowledge, most of course don't
  5. It's a matter of cost. It's cheaper to hedge (even if it's not a perfect hedge) XOM with CVX than to pay premium on options. For your savings you give up some protection due to correlation/cointegration risk.
  6. gody3


    when someone says ONLY, that means that they have no clue how to do it.
  7. gasy


    OR it means you THINK you know how

    see .........that kind of argument means nothing
  8. maxpi


    C'mon, just use Excel, test for correlations and you are good to go.. except for you don't know why exactly the correlations exist and you really might find that decorrelation can occur rather unexpectedly... but hey, you can still put Excel expertise on your resume.....
  9. SPY/SDS... ever hear of ETF's?

    just because he played for the phillies, doesn't mean you won't sound like an ass when you quote his options 101 book...
  10. Uhmm, have you ever heard of "pair trading"? I thought not.

    BTW math students don't know shit about creativity. Well, go figure.
    #10     May 19, 2009