You shouldn't hedge because you are saying a stock will go up or down independent of the market. That's the view you are expressing. Or am I reading this wrong?
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Formula For Volatility Adjusted SPY Hedge
- Thread starter jayjay121
- Start date
You shouldn't hedge because you are saying a stock will go up or down independent of the market. That's the view you are expressing. Or am I reading this wrong?
If you're punting on directional signals produced from a single stock model, where every selection is made in isolation, then you profit or blow up by the efficacy of that directional selection model.Quote from jayjay121:
yes correct.
so are you saying im better off without the hedge?
but what if the basket becomes too one sided?. Stocks do move on their own merit but if i feel i may need something if something major is happening with the main cash markets, dont you agree?
Assuming your signals are better than random, but fail occasionally, then choosing more than 1 stock is a good idea to diversify away that risk. An occasional loser should be bailed out by the vast majority winners.
This is the whole idea of a directional model, no? To pick a direction that's usually correct?
It all hinges on your signals being better than random.
Quote from jayjay121:
not really,
i can win big if im too long but also lose big if im too long.
i can still win if im hedged but reduce big losing days if im hedged somewhat.
When the market rallies do your shorts lose money?
When the market sells off do your longs lose money?
Do you find yourself net long when the market is rallying?
Do you find youself net short when the market is selling off?
Quote from newwurldmn:
When the market rallies do your shorts lose money?
generally yes, but not always.
When the market sells off do your longs lose money?
generally yes, but not always.
Do you find yourself net long when the market is rallying?
no.
Do you find youself net short when the market is selling off?
no.
Quote from jayjay121:
Quote from newwurldmn:
When the market rallies do your shorts lose money?
generally yes, but not always.
When the market sells off do your longs lose money?
generally yes, but not always.
Do you find yourself net long when the market is rallying?
no.
Do you find youself net short when the market is selling off?
no.
You should beta hedge SPY.