"This is the only thing that has made me really money in the last few years. For example I buy/sell ES but hedge them with SPY options. SPY options are so liquid. I have a plan and when I stick by it I usally do OK. But, its based on weeks or months not minutes. I tried minutes but I have a full time job with a fair degree of responsibility. I couldn't apply the focus that minutes need.
My approach is pretty much directional, with benchmarks what to do when. It is not too complicated, simply because I don't want to mess with it and I do better when I don't and stick with the plan What I do often is if I am for example -800 or 800 deltas at the end of the trading day and that is the direction I think it will go, I'll buy or sell some YM (with stops) in off hours just to nuetralize deltas somewhat. Not going all the delta neutral though but to avoid the pain of a gap on market open but leaving the deltas positive or negative in the expectation of direction. Then in the morning, I'll take of the YM unless, the YMs gapped and trending in a profitable direction, I'll squeeze at least something out of the YMs (with stops), even though I lost for the day because the YMs are moving in the opposite direction of my net negative or positve deltas relative to the YM deltas But, the overall position has a directional bias and not trying to trade long/short YMs or ESs off of each other I am not that clever. "
SPY is awesome especially when it is moving, watching the tape is mind boggling in a fast market; like pac man chomping at the bid except those are real orders. Options are deep as well. Something to think about, its good that you hedge but you are trading es hedging with spy options and ym, sounds complicated to me and you can get some nasty divergences on ym and es. I am curious how you deal with that. Wouldn't it be easier to hedge with the same product line in a different strike or expiration. Good trading.
My approach is pretty much directional, with benchmarks what to do when. It is not too complicated, simply because I don't want to mess with it and I do better when I don't and stick with the plan What I do often is if I am for example -800 or 800 deltas at the end of the trading day and that is the direction I think it will go, I'll buy or sell some YM (with stops) in off hours just to nuetralize deltas somewhat. Not going all the delta neutral though but to avoid the pain of a gap on market open but leaving the deltas positive or negative in the expectation of direction. Then in the morning, I'll take of the YM unless, the YMs gapped and trending in a profitable direction, I'll squeeze at least something out of the YMs (with stops), even though I lost for the day because the YMs are moving in the opposite direction of my net negative or positve deltas relative to the YM deltas But, the overall position has a directional bias and not trying to trade long/short YMs or ESs off of each other I am not that clever. "
SPY is awesome especially when it is moving, watching the tape is mind boggling in a fast market; like pac man chomping at the bid except those are real orders. Options are deep as well. Something to think about, its good that you hedge but you are trading es hedging with spy options and ym, sounds complicated to me and you can get some nasty divergences on ym and es. I am curious how you deal with that. Wouldn't it be easier to hedge with the same product line in a different strike or expiration. Good trading.
