Posts Tagged ‘ hedging ’

SMBU’s Options Tribe Webinar: Bubba Horwitz of Investment Portfolio Hedging Through the Use of Options

Apr 20th, 2017 | By | Category: Options Education, Seth Freudberg's Blogs, SMB Options
Bubba Horwitz of makes his debut appearance on the Options Tribe this week to discuss techniques for hedging a trader’s investment portfolio through the use options. Read more [...]

3 Reasons to Pairs Trade with Options

Jul 18th, 2015 | By | Category: SMB Options
Pairs trading is a market neutral strategy that focuses on the correlation of two instruments rather than pure direction. For example, you may want to be long $GOOGL and use a short $QQQ position to offset your systemic risk. Or you may see the relative weakness of $IWM and look to trade it long against a short $QQQ position for eventual mean reversion. The danger of pairs trading is that correlations can breakdown and actually add risk to a trade that was intended to reduce risk. A variation of this style of trading is to use options. By using a derivative instrument, you can create strategies where your offsetting Read more [...]

A Safer Way to Be Long at the “Top”

Jun 11th, 2015 | By | Category: Options Education, SMB Options
When I start getting signals to be long at the upper end of the range, it can be a psychological challenge. Traders don't want to be "late". It may seem like the move already happened and the risk/reward is not favorable to have a long bias. Here's the reality. Market neutral, positive Theta options traders don't have to make that distinction. We have more tools available to us besides Long and Short. My personal preference is to use long strategies in strong stocks, ETFs and indexes. And hold trades like theBearish Butterfly to generate income and protect to the downside. Andrew Falde [email protected] SMBU No Read more [...]

All Hedging is Not Created Equal

Dec 19th, 2013 | By | Category: General Comments, Systems Trading, Trading Lesson, Trading Theory
In this post I will show you a strategy that can be long and short financials at the same time and end profitably. The concept is based on pairing instruments that have different natures. The nature of leveraged instruments is to increase the impact of one-way movements. The nature of unlevered broad-based indexes/funds tends to have more reversion and overlapping price movement. In order to eliminate any curve fitting or algorithmic voodoo, I’m going to simply apply a long/short signal using a 20-period exponential average on both instruments. The signals are to buy a new 60-minute high above the 20 EMA and short a new Read more [...]

Forex Trading: Hedging. Is There an Advantage?

May 1st, 2013 | By | Category: Marc Principato, SMB Forex
There was a time (before 2010) when you could open a forex account with any U.S. broker and have the ability to hedge your spot forex transactions in the United States. Residents outside the U.S. still have the ability to hedge their forex positions. On the surface, hedging sounds like the ideal situation: After taking your initial position, if you are wrong, simply hedge it instead of stopping out with a loss. Sounds like a win-win situation right? Those of you who have attempted to do this know that there is still the element of market timing involved. When do you put on the hedge exactly? When do you take it off? Is there any Read more [...]