Recent content by datahogg

You can use options for pairs trading, but it is best to use in the money options with a delta of 80 or higher. This greatly reduces the theta decay. Vega is a wild card that may go either way. It might be best not to use options in times of very high implied volatility. IV has recently...

Being new to pairs trading I hope experienced traders can add to my knowledge. Normally for a pair say stock ABC and XYZ where the correlation is say greater than 80%, and we go long ABC and short XYZ, we buy a dollar amount of ABC and short an equal dollar amount of XYZ. But what if...