What's your preferred instrument for hedging against stock market crash?

Discussion in 'Risk Management' started by helpme_please, Mar 7, 2021.

  1. narafa

    narafa

    That's what I am doing, covered calls (No naked). But in the case of a large diversified portfolio, selling covered calls on individual names might not be optimal (Unless you already have an engine for it to work out the different scenarios & more importantly the executions for you), this is why I mentioned, you have to work out the correct correlation and hedge ratio and short naked call options on indices or market ETFs to simplify the process.
     
    #11     Mar 7, 2021
    Windlesham1 and helpme_please like this.
  2. $GME
     
    #12     Mar 7, 2021
  3. Guns, Ammo, Whiskey, Cigarettes and Gold.
     
    #13     Mar 7, 2021
    murray t turtle and jys78 like this.
  4. puts on tech stocks with negative PE. probably not a good place to be next week because I'm expecting a big relief rally due to the stimulus bill being passed.
     
    #14     Mar 7, 2021
  5. Amatrue

    Amatrue

    Why don't you buy some puts with the option premium you get from selling the calls? that way you can hedge more downside risk.
     
    #15     Mar 7, 2021
  6. zghorner

    zghorner

    Pure tail hedge purpose...long calls on leveraged inverse and Vol indexes pay like a motherfkr when the market drops hard. Last year SQQQ went from $80->$160 in less than a month. VIX $14->$80. UVXY $10->$130.

    They stay in a constant downtrend and You will lose money 99.9% of the time on these though...must be willing to accept that unless your timing is impeccable you are throwing money away.

    I have been kicking around the idea of simply just holding OTM puts on shit companies as a better alternative. If the market Drops they will undoubtedly print...if the market doesn't drop they could still pay off.
     
    #16     Mar 7, 2021
    murray t turtle and jys78 like this.
  7. JSOP

    JSOP

    LOL :D
     
    #17     Mar 7, 2021
  8. JSOP

    JSOP

    It depends. Overall I find the margins required on futures makes them a bit cost-prohibitive comparing to buying options.
     
    #18     Mar 7, 2021
  9. Overnight

    Overnight

    Live cattle is cheap margins. Don't listen to the cows, do not eat more chikin! Red meat for teh win!

     
    #19     Mar 7, 2021
  10. lindq

    lindq

    There is a third instrument called cash. And much more efficient that puts or futures.
     
    #20     Mar 8, 2021
    zghorner likes this.