How to hedge e-mini S&P exposure when systems go down?

Quote from InTheZone:

If you buy a call, and buy a put, you're risk to this position is just he premium you pay.

The long call and long put will offset any losses you may incur from a long or short futures position. If you're long the futures, the put will give you downside protection. If you're short the futures, the call will give you upside protection. No matter what the futures market does, you will not have unlimited risk.

The upside of course from the straddle, which by itself is unlimited, will now be limited.

Make sense?

-- ITZ
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They would both have to be deep in the money for the delta to be close if not 1. That requires quite a bit of outlay in terms of margin. The B/A spreads on these things are also pretty nasty, and you pay them on the way in and on the way out.

Choose your poison.

nitro
 
I think the least of all evils is buying a call if you are caught short. So, which of the following will be the best "option":

1. option on big SP
2. SPX.X option
3. OEX.X option
4. I think options also available for the ES (Any traders trading this?)

And how many contracts to protect one contract of ES and at what strike (assuming the entry price is 900)?


pretzel
 
Quote from InTheZone:

[BAfter the recent Globex outage, I've decided to come up with a disaster plan in the event of another outage at Globex, my online broker, or the internet's infrastructure.

-- ITZ [/B]
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I've thought about this too, here is my plan:

1. Have a laptop with a good battery and a regular dial-up connection. This is in the event of power failure in my home, I can still use the laptop to exit a position, because no power is required, and phone lines are not affected by electricity blackouts.

2. Have a cell phone handy with my broker's number already programmed. If both my electric power AND my phone lines are down, I can use the cell to call the broker and exit the position.

3. If the CME goes down again and trading in e-mini's is halted, I have been assured by the broker that I can call them and they will trade the large contract for me on the floor pit to offset my position in the mini's. I asked a lot of questions about this and was assured it can be done and would be done, and would not require further capital in my account to make this offsetting trade.

4. If both the CME and the pits stop trading, and my broker's office cannot be reached by phone, there has probably been some terrorist attack in Chicago and we're probably all out of luck.
 
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