Important! AGAIN.. HEDGING YOUR POSITIONS.
From GM
Lions.. As I just covered in my MARKETS A LOOK AHEAD VIDEO.. IF you are concerned about current positions, you may consider hedging them with ‘protective puts.’
You do this by buying puts with an expiration say a month out, IN THE MONEY 10% of the overall trade.
For example.
You own out of the money calls on XYZ June 18, 2021 value 10K
You buy in the money puts on XYZ November 20, 2020 value 1K
In this manner you remain net long but with a hedge.
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For small fries, you can match delta. If you need to hedge and don't have enough to be able to hit the 10% get and option that has less delta. If I'm long slv and my option has a delta of .50, I can buy a put option with a delta of .10 or .25.
Thank you