VERY SIMPLE WAY TO HEDGE YOUR POSITIONS.
Lions.. 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.
Now.. IF you are short a position you can also hedge..
For example.
You own out of the money puts on XYZ June 18, 2021 value 10K
You buy in the money calls on XYZ November 20, 2020 value 1K
In this manner you remain net short but with a hedge.
GM
Sure, I'll hedge 1k Puts on 10K Calls when I get rich like you guys. I hedged a $3.00 Put on $200.00 worth of Calls. No prob, I did an ACH today to refill my trading account AND I'll put a few more bucks in the bank to transfer to my trading account on Monday. I wish there was an easier way to put money in my bank account without having to actually physically go there. I don't like keeping money in a bank because when the banks lock up they are NOT going to give any prior warning so one of the people they are not going to trap will be me. I WANT this market to tank for a while so I can go long near the bottom when Call options are cheaper.
Gregory is giving sound advice. Even I bought a $3.00 Put today. Use what you got man. Why not make a little bit of cash to soften the blow of other positions going down? You will sleep better at night. Me, I don't care about losing a little money, I DO care about losing to "The Market" though. I don't want to see them win. "The Market" laughs at me when I lose money and THAT chaps my hide. When "The Market" takes my money it LAUGHS HYSTERICALLY at me like The Joker and that image of The Joker laughing stays in my mind all day long and I start fuming. So with a Put on, the market can go down all it wants...I still win and the market frowns. I'M doing all the laughing now! lol
Can someone explain why ITM put strike price is higher than the stock price ?