how to hedge a postion
- Thread starter met1989
- Start date
what's that ?
US Gov't T-Bond ETF which offers exposure to treasuries without messing with CUSIPs and individual issues--which can be a pain. When the sh*t hits the fan, like now, the Big Boys will typically roll money out of the market (SPY companies) into Treasury Bonds, because they're afraid of blowing out their accounts in the equity markets. This is why treasury rates have plummeted recently; massive demand for treasuries because they don't want to get ass-hammered by the CV plunge in stocks, DOW, and SPX/SPY.
Forthwith, as it relates to your question, GOVT might work as a cheap way to hedge the SPY. You could also buy puts or short the VIX, but then you'll pay premium for the put, or pay a 4% or so commission for shorting, respetively
https://www.bloomberg.com/quote/GOVT:US?sref=JfqbOIWW
I should probably add that this is my opinion; I'm not a financial adviser, and not licensed to give advice.
Last edited:
Matt_ORATS
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If I understand you to want to cover your downside, you may want to consider way out of the money long term puts and over hedge (buy more puts than are represented by your long).
Here's what the backtest looks like:
