Hedging ER2

W

WCAG78

There was a thread in ET about hedging ER2, the e-mini Russell 2000 futures, and I cannot find it now. Can you please post the link if possible? Thanks a lot.

My normal trade size is several contracts, the typical trade length is 1 to 2 days, and I am short at ER2 at the moment. With such a volatile market, I wish to hedge my position.
 
There are several ways. The obvious way is to go long IWM against your short ER2. The ratio is about 7:1.

Another way is to short the SDD, since the SDD goes higher when small caps go lower, and vice versa. But this is a statistical arb not really a hedge:

http://www.proshares.com/funds/sdd.html

nitro
 
Thanks nitro.

I know about IWM, but was wondering whether there could be a more effecient, cost-effective way. I remember there were several detailed methods in that thread. Can anyone find it now?
 
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