Hedging the wheel

Discussion in 'Options' started by markthepadrone, Sep 16, 2022.

  1. It's obvious that you don't know what you're talking about by the terms you use incorrectly. Please excuse yourself from this grownup discussion.
     
    #31     Sep 17, 2022
    BlueWaterSailor likes this.
  2. That might work for you but that has nothing to do with what we're talking about. Have you always had trouble staying on topic?
     
    #32     Sep 17, 2022
  3. Since you're the only autistic person here, please share your math.
     
    Last edited: Sep 17, 2022
    #33     Sep 17, 2022
  4. So back to the serious people here. When my puts get assigned, I'll short MNQ contracts that add up to a notional value equal to the TQQQ position. There are two issues I see with this.

    First, when to drop the MNQ position is the market starts moving up.

    Second, is a 1:1 value the correct amount? How does the 3x of TQQQ play into this?
     
    #34     Sep 17, 2022
  5. destriero

    destriero

    You should stop using that word. You're going to cover your risk in TQQQ and short calls, ostensibly making the call naked risk. It's mind-numbing stupid.
     
    #35     Sep 17, 2022
  6. Am I correct in figuring this would be profitable unless price closed between the two strikes, or dropped widely enough so that your cost of the call + funds from two calls sold didn't counter the loss?
     
    #36     Sep 17, 2022
  7. Say what? Hedging can be done with pretty much anything, as long as you have correlation. Since basic math seems to be a stumbling block, try paper-trading, say, 50 shares of SPY and get short one /MES contract, then watch the P&L. Take as long as you need...
     
    Last edited: Sep 17, 2022
    #37     Sep 17, 2022
    markthepadrone likes this.
  8. What word?

    If I get assigned TQQQ and then short MNQ I'm at 0 Delta ish. I then sell covered calls against the TQQQ position. If TQQQ recovers or gets called, I'll BTC the MNQ short. The only risk I see is if I hold the MNQ short while TQQQ goes up past my assignment value. Why wouldn't this work?
     
    #38     Sep 17, 2022
  9. destriero

    destriero


    Shares and short two 35C = short one lot 35 straddle. Ideally used in skewed mkts, so better to run it on 2X bear funds. What two strikes? Between the short calls and the long wing? Quite a few variables; vol-line, skew (is spot above or below short strike?), time remaining, spot/vol corr. Empirically, overwrites/bull synthetic straddles dramatically outperform buy-writes.
     
    #39     Sep 17, 2022
    Flynrider likes this.
  10. In balance?
    Isn't 50 of SPY $19k and 1 ES is $195k? Maybe MES.
     
    #40     Sep 17, 2022