Best way to hedge equities with vol elevated

L

Lpw54

I'm looking for ideas on hedging my portfolio of stocks - I realize this should've been done in early February - with VIX still elevated at 42. Buy puts on SPY would be easiest, but obviously not cheap in this vol environment, unless vol spikes higher from here. Buying VIX calls could be another option, but I've never been able to figure out whether it's best to buy SPY puts or buy VIX calls for protection.

I can also spread both the SPY puts and VIX calls to cheapen the cost, but that limits the amount of hedge I'll have. Would selling a SPY call spread or VIX call spread be better in this elevated vol environment? Again, the protection would be more limited.

I could also buy puts on all of my underlying stocks and perhaps sell short-dated calls to cheapen the cost. This would require more maintenance.

Appreciate any suggestions you might have - thanks.
 
Lpw54 said:
I'm looking for ideas on hedging my portfolio of stocks - I realize this should've been done in early February - with VIX still elevated at 42. Buy puts on SPY would be easiest, but obviously not cheap in this vol environment, unless vol spikes higher from here. Buying VIX calls could be another option, but I've never been able to figure out whether it's best to buy SPY puts or buy VIX calls for protection.

I can also spread both the SPY puts and VIX calls to cheapen the cost, but that limits the amount of hedge I'll have. Would selling a SPY call spread or VIX call spread be better in this elevated vol environment? Again, the protection would be more limited.

I could also buy puts on all of my underlying stocks and perhaps sell short-dated calls to cheapen the cost. This would require more maintenance.

Appreciate any suggestions you might have - thanks.
More...


Buy calls on the stocks you already got that are a month or two out, and then sell calls that are Two times the duration of those you bought, this way if the move is severely down you will net a credit, and if its up you will also end up making money

example, buy may 30 dollar call for 2 bucks lets say,,, sell june 30 dollar call for 3 bucks,,
big move down you keep the dollar, big move up you make the dollar also
 
systematictrader said:
Buy calls on the stocks you already got that are a month or two out, and then sell calls that are Two times the duration of those you bought, this way if the move is severely down you will net a credit, and if its up you will also end up making money

example, buy may 30 dollar call for 2 bucks lets say,,, sell june 30 dollar call for 3 bucks,,
big move down you keep the dollar, big move up you make the dollar also
More...


You could do it on any stock i guess but doing it on your stocks you already own makes it easier to digest the moves and not too trouble some if it goes up and stops exactly at the 32 mark in the example we gave
 
You must log in or register to reply here.
Back
Top