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.
Delta is how the price action is reflected on a dollar move in the stock price. If it is .50 for slv and slv goes from 22 to 23, the option will gain $50. If it goes down to 21 you lose $50.
Oh. Ok. Now I know what your saying. Thank you for that clarification. I have another question. When we hedge our calls with puts. Do we buy the same option as a put that we did as the call? Like if we bought msft 220$ calls, do we hedge with a 220$ put? Again. Thank you for helping.
That depends on strategy and the length of time you think the trade might go south. It also depends on dates and what the target of the long is. I sometimes hedge the same strike price on an option expiring in near term. Or sometimes I use delta to perserve profits or to hedge my position. This might take some time to get a feeling for. I always say a lose is tuition in the school of markets.
This is a lot to think about. I think I will have to use my computer to see the delta on a put before buying. Because right now I can only see the delta after buying. To bad it’s not easier to understand. Like a simple hedge your calls option. Lol. Thank you very much for your help. If I may ask. Say we have a long call, One that’s about 8 months out from expiring. And we buy a put about a month out. Like the boss said. To hedge. Do we buy the same $ amount of the call as a put or do we do it as a different amount? I know you said it depends. And is there a way to calculate the delta? Before buying a put? Thank you very much for helping. I know I know very little and only started doing this about a month or so ago.
As a political observer i see this scenario coming: Democrats will not, NEVER, accept a Trump win. No matter if it is cristalclear or not. They did not accept it 2016 and they will not accept it in 2020. I think, Trump will win with no doubt. Said it before, I see ZERO chance for a Biden win. So Democrats will go crazy and will try to start riots all over the country. There will be no other way out than activate the Military. Than I suppose we will see high level arrests. Podesta, Clinton, Biden for example. That’s only my guess. But I feel better to be prepared for that scenario.
Thank you very much boss. But I do have a question. MSFT has the calls of June 18th 2021 at 220 a call. When we do the puts for December 4th 2020 which is about a month out. Do we buy the 10% of the calls value in puts of the same dollar amount? If the call was at 220$ do we buy the put at 220$? That’s what I’m not clear on. Thank you so very much for all your help.
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.
Forgive me, but, what’s a delta? I’m still learning here. Thank you in advance.
Delta is how the price action is reflected on a dollar move in the stock price. If it is .50 for slv and slv goes from 22 to 23, the option will gain $50. If it goes down to 21 you lose $50.
Oh. Ok. Now I know what your saying. Thank you for that clarification. I have another question. When we hedge our calls with puts. Do we buy the same option as a put that we did as the call? Like if we bought msft 220$ calls, do we hedge with a 220$ put? Again. Thank you for helping.
That depends on strategy and the length of time you think the trade might go south. It also depends on dates and what the target of the long is. I sometimes hedge the same strike price on an option expiring in near term. Or sometimes I use delta to perserve profits or to hedge my position. This might take some time to get a feeling for. I always say a lose is tuition in the school of markets.
Personally I LOVE my losses. When I win, I just get happy and learn nothing. When I LOSE I learn a LOT! lol You're right.
This is a lot to think about. I think I will have to use my computer to see the delta on a put before buying. Because right now I can only see the delta after buying. To bad it’s not easier to understand. Like a simple hedge your calls option. Lol. Thank you very much for your help. If I may ask. Say we have a long call, One that’s about 8 months out from expiring. And we buy a put about a month out. Like the boss said. To hedge. Do we buy the same $ amount of the call as a put or do we do it as a different amount? I know you said it depends. And is there a way to calculate the delta? Before buying a put? Thank you very much for helping. I know I know very little and only started doing this about a month or so ago.
https://www.amazon.com/All-About-Derivatives-Second/dp/0071743510/ref=sr_1_1?dchild=1&keywords=all+about+derivatives&qid=1604259829&sr=8-1
https://www.amazon.com/All-About-Options-3E-Started/dp/0071484795/ref=sr_1_3?dchild=1&keywords=all+about+options&qid=1604259736&sr=8-3
Thank you
As a political observer i see this scenario coming: Democrats will not, NEVER, accept a Trump win. No matter if it is cristalclear or not. They did not accept it 2016 and they will not accept it in 2020. I think, Trump will win with no doubt. Said it before, I see ZERO chance for a Biden win. So Democrats will go crazy and will try to start riots all over the country. There will be no other way out than activate the Military. Than I suppose we will see high level arrests. Podesta, Clinton, Biden for example. That’s only my guess. But I feel better to be prepared for that scenario.
Thank you very much boss. But I do have a question. MSFT has the calls of June 18th 2021 at 220 a call. When we do the puts for December 4th 2020 which is about a month out. Do we buy the 10% of the calls value in puts of the same dollar amount? If the call was at 220$ do we buy the put at 220$? That’s what I’m not clear on. Thank you so very much for all your help.