Buy QQQQ puts

Quote from vetten:

hi daddy.

thanks for your contribution.



those books you`re writing up about, will they explain a protection set-up for a market crash?

thanks daddy
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The books I mentioned will help you understand options and synthetics and thus enable you to work out your own strategies to protect and manage your positions. From the things you guys have written so far you don't seem to have a good grasp of how options actually work and how they can be used most effectively or what strategy to choose to hedge your underlying.
As an example, Cottle talks about using a 'slingshot' to protect your long stock and still retain potential unlimited gain to the upside. But as I said, one needs a good understanding of options to implement those type of strategies.
Good luck
db
 
Quote from tonyzhou:

That is what my concern too to buy the out-of-money option. So what I am thinking is to buy in-money option. I look the in-money option, say $47 put, the time value is negative! That means you didn't pay any thing on time! So the whole market volatile is reflected in the option price. That looks what I want.

As a conclusion, my thinking is the opposite. Not to buy the out-of-money option, on the contrary, buy the in-money option. Then the option will not expire worthless. IS THAT TRUE?
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Negative time value on index options?
Won't expire worthless if you BUY it ITM?

Do yourself a favor, learn how options work before you trade them, because right now you're going to set yourself up for a huge disaster if you try to play with options.

Unless you're buying options so deep ITM that the delta is 1, there's always some time value, and there's no negative time value on options for anything that's arbitragable (VIX options are the only ones I know about that can possibly have negative theta).

And no matter how deep ITM the options are that you buy, there's always a chance they expire worthless.
 
Quote from demoship:
And no matter how deep ITM the options are that you buy, there's always a chance they expire worthless. [/B]
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It wouldnt matter demo, cos he got his portfolio at the other end
and that one would be up huge.:cool:
 
Quote from demoship:

Unless you're buying options so deep ITM that the delta is 1, there's always some time value, and there's no negative time value on options for anything that's arbitragable (VIX options are the only ones I know about that can possibly have negative theta).
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Off topic, but Deep ITM european options have a "negative" theta. Look at all the Index options that are european. NDX, RUT, XEO, STOXX, ect.

Oh, and on topic... You are creating a somewhat synthetic call because the underlying portfolio you are hedging is not perfectly correlated with the option. So, in theory, you can make more money than the call if you outperform the QQQQs, but you will lose if you underperform. You will also lose the time value associated with the put, so good luck!
 
hmmm, well fun, the only reason i can think of that would make that the case, is if the option is so deep ITM (like 100% ITM), that it'd actually be discounted because the writer gets to collect interest on the premium.
 
Deep ITM European-style puts trade under parity cause of the way the option pricing works. In other words, it's because of the inability to exercise them early.
 
hi guys,

so I got to protect my trading capital year in year out and I want to spend as little as possible on this insurance and I dont mind
if the insurance vehicle is worthless in the end.

So I have $ 1,000,000 trading capital to insure from a sudden collapse on a black Monday

I`m not asking for a perfect answer, because I realise the insurance vehicle is difficult or impossible to value in the future.

so cover $ 1,000,000
spend as little as possible as a percentage of $ 1,000,000

how would you guys do it RIGHT NOW!!!!
 
vetten, we've already given you your choices. No one here is about to hold your hand for you so pick a choice or do more research and come out with your own solution.

So far you have 4 main choices :

1)Buy puts.

2)Take the hit.

3)Ratio weight with QID or DXD or futures etc against your beta.

4)Use some type of stop loss X amount out.

Please stop asking the same repetitive question.
 
Quote from jj90:

vetten, we've already given you your choices. No one here is about to hold your hand for you so pick a choice or do more research and come out with your own solution.
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thanks for your opinion jj,

I think there`s nothing wrong with asking questions, certainly not when somebody is experienced in other areas and not in options.
And options are not that easy to master is it?
And I only would like them for protection.

I thought options are the way to go but
you guys were going on about ITM/OTM options, European style
etc etc., so that`s why to go back to the subject at hand is not that bad is it?

sorry if I stepped over the line jj:cool:
 
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