How to hedge terrorism? I watched a CNN program about Al Qaeda. They said that before every attack, Al Qaeda is required by their custom to 'request that Americans convert to the Muslim faith'. If Americans do not convert, this justifies their impending attack. Al Qaeda just released a warning and a conversion request. Does this mean that an attack is planned? How do you best hedge? Does anyone here have or use a terrorism hedge?
I went long 50 Osama Calls $1.50 a piece... Hedge by trading the secondary reaction to a terrorist attack: market drop and IV spike. So put on positions that profit from market drop and IV spike (S&P puts, VIX Calls, etc...)
Yeah, that's what I'm thinking.... I'm not sure how far out they announce a warning and then the attack. But they did warn before a number of them and I think it was a few months out. 9/11 is almost here too... not sure how that plays into things. I normally don't buy into all this hype. Its just the way the world is and I think hedging terror attacks is a legitimate issue to discuss.
Short the Airlines no? Fellah's lets keep this on topic....or this thread will end up in the Politics and Religion forum before you can type 9/11 and exit your hedge...err profitable trade.
if attack occurs and definate country such as iran or syria is found to be helping bin laden, there will be much uncertainty as to whether the american military may invade another arab country. This uncertainty will cause price of oil to skyrocket. there you have your answer. long on calls or futures in oil
One play would be to sell short a straddle after the attack... that would most likely be a profitable trade. However, my concern is how to hedge my entire portfolio. I wonder if there is any way to do this other than by buying puts.
yes puts on airlines work for me. few years back, i would buy calls on tasr, this was when it was only 10 to 15 dollar stock~