How to hedge an ES or YM trade?

I want to take this opportunity to thank Elite Trader (awesome website) and the elite traders:

Surdo,
Jaysal555,
SpecialPerson

. . . for taking the time and effort to provide this assistance to not only me but to others who read this thread.

I like all their ideas and will research them further.

If anyone would like to elaborate (supportive or suggestive) on the great ideas they presented - your input is appreciated.

I would imagine that very successful traders of 50 or 100 years ago may not have had access to an organized options market.

If you have a different angle or approach, I am at this point very open to any and all ideas.

Is their anyone who recommend not hedging and just having a naked position (other than a stop loss) or is hedging definitely the way to go?

Thanks.
 
I dont know you account size so I dont know what works best for you. But this method does tie up a good amount in margin.

If your long 1 ES contract you would want to sell a call on the ES' themselves. They have options as well. You can use them as your hedge on your long.

If you would like to use the SPY (which tracks the S&P) you can sell 500 shares per every contract long and that will make you flat. Whats nice about this is you can control your long/short exposure to the market.

You buy 1 ES contract and then go sell 250 shares of the spy you are then net long pretty much half an ES contract, or long 250 deltas. If you become more bullish you can take off you hedge and buy back your short and now be long 500 deltas or equal to 1 ES contract.

It's a nice way to get longer/shorter the market using futures which tie up more cash then being long 500 shares of SPY. You can do the same with options as well as long as your aware of the options greeks.

This is pretty much delta hedging with different instruments. You can look into that.

I watched Tom Sosnoff of ThinkorSwim do this at the Orlando Money Show.
 
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