12/19: SPY: $1,342.00 Hedge: $130.00 Net for this trade: -------------- $1,472.00 ^ kenwx23 I will answer your questions a bit later. I have to go run off to something now.
gap up outta nowhere! 12/20: SPY: $4,254.00 Hedge: -$1,382.00 Net for this trade: -------------- $2,872.00
Both kinda. Like I start out with a structured exit plan but depending on what happens I may adjust it as I go. Hedging allows holding more SPY which pays more dividends (if the position is still open when dividends are paid). I mean yeah technically instead of buying x amount of shares of SH I could just sell an equivalent amount of SPY and the current net position at that particular time would be the same, but I prefer to do it this way because psychologically it's easier for me to keep track of everything treating it as two separate positions. And this potentially reduces some wash sales.
I guess I am confused then. If you are going long spy and short it's inverse with the same position sizes, wouldn't the returns on trade always be zero? I understand how hedging works, just not in this case