I'm looking for advise on putting on a Single Stock Futures position. Ideally, this would be hedged with a maximum loss with the purchase of put options. This trade is somewhat complex, but involves the purchase of a SSF, and OTM put option. Anybody familiar with SSFs and hedging strategies to limit the risk? Hedging seems absolutely essential given the leverage used and illiquidity potential of SSFs. Also, does Interactive Brokers take into account put options of a SSF long position in their dynamic margin calculation? Thanks guys.
Hedge using closely correlated instruments across asset classes and exchanges will allow you the monitor price action to time your entries and exits as the instruments converge and diverge while containing your risk of ruin. You can reasonably evaluate your risk looking at the historic divergence. Look at futures and their corresponding ETF's (ie. SPY and ES) Checkout OCC list of cross margin eligible instruments. These tend to have liquid options that under a JBO account you would be entitled for cross margin relief.