Best Way to Hedge GE

T

trader345

Any idea as to best way to hedge GE exposure? Don't want to use options because of time decay. Was thinking of buying some SDS. I know there is some tracking error but that occurs more over the long-term, correct? I especially want to hedge exposure over this weekend since GE just had a pop.
 
Quote from trader345:

Any idea as to best way to hedge GE exposure? Don't want to use options because of time decay. Was thinking of buying some SDS. I know there is some tracking error but that occurs more over the long-term, correct? I especially want to hedge exposure over this weekend since GE just had a pop.
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You can compare the tracking error to the theta decay over your intended time frame and make a determination on which is the least costly hedge. SDS also has 'time-decay' due to leverage. Without any analysis, my guess would be that an option would be a better hedge, that's just my 2 cents though.

A more precise hedge could be a SSF (if they are available for GE, I'm assuming yes) or a synthetic option position to replicate an opposing GE position (but then why not just temporarily reduce exposure - same result).
 
The risk-reversal. Buy the 19P funded by the short 21C. Minimal decay. CC upside, downside free put. maybe ratio it 3/5 favoring calls to trade it at no outlay. Or go 18/21.
 
Quote from trader345:

Any idea as to best way to hedge GE exposure? Don't want to use options because of time decay. Was thinking of buying some SDS. I know there is some tracking error but that occurs more over the long-term, correct? I especially want to hedge exposure over this weekend since GE just had a pop.
More...


....you dont think ben and bama is hedge enough?....
 
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