If you've got catastrophic loss covered, try an OTM put calendar for your intermediate move. You'll gain on delta and vega. If your overall portfolio is long delta, then a move up by the underlying makes the calendar moot, but your long deltas keep your p/l healthy.
Sorry, I don't know what higher relative IV is... or at least what IV situation those words refer to. Suppose you have a $100 stock and you want to finance a 95 put with two 100/105 bearish call spreads. At an IV of .25, the 95p might be $2 and each 100/105c vertical might be $2 (made up numbers). At 2:1, the net credit of $2 softens the downside loss distance to strike to $3 Now suppose that IV is 50. Each vertical might generate 10-20 cts more but the put might cost 3 times as much. Now the hedge is a debit so the downside distance until fully protected might be $6-7 ($5 to strike plus the debit). IOW, the higher the IV goes, the worse this relationship gets and the more the risk profile heads south. You could probably improve the risk graph by moving the call strikes higher and even increasing the ratio of verticals to long puts (the underlying has more room to appreciate before the verticals become a problem) but the same poorer hedging protection relationship should be similar as IV gets higher. I like the idea of a hedge for a credit (at lower IV) with an open upside. I'm not an index kinda guy but it might be more applicable with them. My next mutational thought would be how to reduce that downside gap until the put protection kicks in. I'd look at slightly over ratioing the number of long puts to UL (giving some upside gain if the UL really tanks), writing more verticals (larger credit) and buying one less long call (to defray the net cost/increase the credit). My broker already loves me but something like this would make him worship me
I use long straddles as additional portfolio protection. I use options that have 60-90 days left until exppiration--to avoid time decay. Therefore, they are more sensitive to volatility increases. If I think that increasing volatility is a problem for my current trades, I place ATM long call/long put. I leave on until I am satisfied that volatility begins to trend down. Couple ways to manage this: either exit the spread, or cover the ITM option with a long underlying. Once the underlying bounces back to the strike, then sell it. Can do it the same way as the underlying goes upward--thiis treatment is more speculative, for I only want the straddle to be insurance.
Sorry, when I said "higher relative IV" i meant If the IV is somewhere between 25%-30%, and now it's 40% (this is higher relative IV) vs a stock with a high IV that's always 60% I guess it doesn't matter. Does that still give you upside potential? With the less call, is this just a reverse slingshot with higher ratio of verticals to puts? I thought if the "house" liked you they throw in a room with a few drinks and maybe a couple of other perks
The short answer is that the slingshot hedge has a larger drawdown at higher IV, all other things being equal. Why the IV is higher is immaterial. Ummm, any chance you have a phone number for that "house" ??