Hedging long call

Discussion in 'Options' started by turkeyneck, Oct 18, 2012.

  1. If a front month long call with 30 days till expiration moves against you and you are concerned about further downside in the next couple of days, is it a valid hedge by turning it into a call spread (next strike up) and keep trading the short leg?
  2. There are so many ways to answer that question....changing your view once in a trade usually only gets ya whip sawed.... be explicit on the view the underlying. The strike etc
  3. Long AAPL Nov 640 Call just before the GOOG snafu today and down about 10% at the moment. I expected it will go ITM before earnings when I put on the trade.
  4. My first question is.. why are you worried about a 10% draw down on an outright premium purchase. The premium paid is your stop... this an earnings play or a pre earnings play? With this you have to have a time frame and an exit strategy... are you doing what ifs on delta and implied vol changes... you have to know what happens if this or that happens and have a plan... are you over positioned for your account size? Is that why your worried.. you hold through earnings your probably gonna see a hell of a lot more then a 10% change in your position