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
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
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.
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.....
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...
Uhmm, have you ever heard of "pair trading"? I thought not. BTW math students don't know shit about creativity. Well, go figure.