Help, Option MM is eye balling me !!

Quote from ogarbitrage:

This does not really make sense.

Can you give an example of each side of the trade? ie: short ES and you expect a breakout to the upside so you buy an atm call to hedge?
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Sorry I was a bit preoccupied by closing my position.
I have little knowledge of the terminology. The general idea is kinda or understood but there is alot missing. A few days before the drop the thought to hedge had crossed my mind, I did not take action on it(alot of things cross my mind and some good and some bad)

This would of been a perfect hedge (below) I am sure it is not as simple as I think as risking 450 to get 1000% (or whatever) he says must have alot of conditions behind it. I am not sure what but i could only guess that if price went up I would of some how been screwed. even though it does not make sense.

As mentioned I am not familiar with the options I have (futures,options,derivatives ect) but here you can see what May of been a good play if the lose was limited. With the odds mentioned I wonder if the slightest uptick in price would of closed my hedge some how.

So now, can I use this instrument to do what he said and also take the opposite side ?

That would mean if price moves I make multiples of my investment but if i loose i only loose 450$

I imagine that after such a move people have bought this instrument and now the price is higher or the payout is lower ?

Sorry I was a bit preoccupied .

http://www.kitco.com/news/video/sho...dging-Your-Physical-Gold-When-Prices-Are-Down
 
I talked to a bank in Canada about buying put options, they told me that the feature is only available through a margin trading account.

From what I read, there is no risk involved in buying a put option except the amount one pays. I tried to explain this to him and he told me that they can only do it through a margin trading account.



1. Am I wrong in my understanding that the only risk is what I pay (total cost of put and fees)?

He then told me that they do not offer options on futures and I cant buy an option on gold. I can buy an SPDR gold that closed at 134.30$

2. Does the Spider gold track the futures gold price % wise perfectly, is it possible spot gold drops 5 % and SPDR gold only drops 1 %


3. Is there some where I can open an account fairly quickly to buy options on gold without having to apply for margin and is reliable ?

Thank you
 
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