Bring it on, Douche Bags

[mdporter]

mdporter-

 

That Statesman is built down under where things are reversed.

 

 

 

 

Even the Chinese put their drivers on the left side. The rest of y'all are backwards douches.

[Rationalize]

...

I remember when in first days of the year we are at 930 and bull lived here - I was short and I got scared so I sold options to hedge - slept better one night and then down we went.

M2M thread for that weekend.

...

Ok ok, this might be out of turn, but the idea of selling options to hedge really scares the bejesus out of me.

 

Selling options to hedge is really not very effective, and some would say foolish.

 

It?s like jumping out of a 10th floor window and landing on a small pillow.

 

Seriously, prancing_cow W.T.F.?

[shorty]

Selling options to hedge is really not very effective, and some would say foolish.

if that's true then conversely it must also be true that buying options to speculate is very effective, some would say ingenious

 

in fact, neither statement is meaningful because both have no context

 

the efficacy of any option trading, hedging or investing strategy can be fairly evaluated only versus its intended performance over changes in time and price of the underlying instrument(s), i.e., the desired profit/loss characteristic expected to result from putting on the position(s)

 

in other words, depending on what you're trying to accomplish, there almost certainly is an option strategy available that will be precisely effective, as long as it's in a liquid market

[Jimbo]

WHY CONTEXT MATTERS

 

"in fact, neither statement is meaningful because both have no context"

 

As shorty says its all about context - there is no end of strategies and financial instruments to carry them out.

 

What is lacking is the correct understanding of the context which determines which strategy you carry out

 

Correct understanding of context is vital in order to choose correct strategies.

 

As Taleb says in the Black Swan - Turkeys think that the human being feeding them is a wonderful person - because they have no experience of thanksgiving.

 

Throw in the thanksgiving context and tukeys would have an entirely different view.

 

For instance I think the market will rally say another 10% - but it is in the overall context of a bear market rally.

 

Its the context that is the "difficult" bit.

[Rationalize]

...

I remember when in first days of the year we are at 930 and bull lived here - I was short and I got scared so I sold options to hedge - slept better one night and then down we went.

M2M thread for that weekend.

...

 

Ok ok, this might be out of turn, but the idea of selling options to hedge really scares the bejesus out of me.

 

Selling options to hedge is really not very effective, and some would say foolish.

 

It’s like jumping out of a 10th floor window and landing on a small pillow.

 

Seriously, prancing_cow W.T.F.?

 

I can't really think a context where this would work out well. [*ideas welcome*]

 

OK, so lets aSSume this is a PUT writing adventure, to reduce that nasty negative delta ..

 

Essentially, what you get is a partially, fully, or over covered PUT.

 

Fully covered:

 

- Merket goes up and the index chort forks you, minus the tiny PUTski premium.

 

- Merket goes down and you get nothing but the tiny PUTski premium.

 

Under Hedge:

 

- Merket goes up and the index chort forks you, minus the really tiny PUTski premium.

 

- Merket goes down and you get some action from the chorts that were not covered.

 

Over Hedge:

 

- Merket goes up and the index chort forks you, minus some PUTski premium.

 

- Merket goes down and you get mega-ass-blasted by the PUTs naked parts.

 

 

That's a lot of forking, and not a lot of hedging, no?

 

Buying back some underlying might be a neater idea.