I have a strategy that consists of several positions that are mainly half long half short. However I have another one that can get several like 80+ positions all short or all long. This is way way too much risk (at least for me) and what I've been doing is if I get long, I just short SPY. I'm assuming i'll break even with this trade less commissions (I do not have slippage, as I know how to use the correct combo of order to achieve this). However i'm thinking that GOOG is a better alternative. You think I should hedge w/ GOOG? or keep on hedging w/ SPY, GOOG will definitely cost less but is is correlated enough w/ the mkt to warrant the change?
Consider the following. You have 80+ long positions and are short an equivalent in GOOG shares. Then: 1. Market tanks but GOOG suddenly announces great company-specific news. GOOG stock goes up 10%, thus you lose 10% on your short GOOG hedge, while your long positions fall 10% with the rest of the market 2. GOOG stock you are using to hedge gets halted for whatever reason. 3. GOOG displays relative strength, relative to rest of market, for no apparent reason
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