hedging

systematictrader · May 13, 2020

notafool said:
@OptionsOptionsOptions i guess you are right about the in the money calls, atm would be better. as to what you said i should go with calls, if you would have read more carefully you would see that i am trying to be fully protected. and i know i wasnt clear but if i buy a put a couple of months out theres more then enough time to sell a bunch of spreads to make up the money that i paid for the put. and i dont know if this is gonna be a shocker, i highly doubt that this bull rally is going to sustain much longer.
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Atm is better yet time
Flies and most of us underestimate that

deep in the money better
Why let time
Work against u

systematictrader · May 13, 2020

LanceJ said:
I understand why you would buy D-ITM calls, because of the high delta and low premium. But when you also buy a put you make it into a long volatility position, you need a strong trend or a ton of scalps which can be challenging. Selling credit spreads would generate little income. Then when the volatility you need for profit for the first 2 legs hits all the credit spreads you sold in disproportionate amounts to fund the put will all be moving into the money and maxing out losses.
I think a better long volatility position would be buying Calls and selling stock delta neutral.
What is your goal?
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the purpose of this is what to just catch volatility ?

systematictrader · May 13, 2020

Atikon said:
minimize time value? You mean time decay/theta? If you want to reduce time decay buy long term options (6 months+). You are going directional, if the market goes up, you will have to buy back calls for more money or risk letting them expire itm, also the puts you bought will be worth way less. You wouldn't even be able to buy more puts through selling the credit spreads, as the money will be acknowledged as buying power when you sold the calls/they expire (talking normal margin account here/portfiolio margin may be different).
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6 months i agree

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hedging

systematictrader

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