Is it possible to hedge option?

A

ANCOLL

Yesterday (24Sept07)
I stimulate the FDS trading and see what's happened today

Hedging-option.jpg


FDS trading at 64.22
As we can see in the Profit/ Loss column,
all my position in the picture will go on profit, whether the stock move up to 69.00 or move down to 60.00

Just try to figure it out,
How does it happen?
Is it possible to say this method as a hedging?

:confused:
 
I dont see much of a hedge anywhere.... Looks like you're long some at the money options which are somewhat delta neutral with the stock at 64 ish. All that means is you need the stock to move otherwise you're going to get buried on theta.

What are the actual positions in the options you have in that simulation?
 
@xflat
All the ticked position which I put on the picture are my position
(except 1 position which I un - tick)

I understand this position will be buried by their theta, just cant really understand, why the "option risk profile calculator" in TOS shows all my position will be on profit even though the stock move up or down.


Something wrong with the calculator?
:confused:
 
I dont use TOS but I am guessing tha the picture you're seeing is just a snap shot in time for today and as time goes by that position decays into a loss unless the stock moves
 
Quote from verbotenlaandia:

You can choose different skins on the TOS platform?? Huh...didn't know that.
More...

Yes, it's on the login screen, three choices are black background, metallic, or white. I can't see s lot of the stuff on anything but black.

BTW, OP, go to the "plot lines" box and select 2 expirations to see what can happen. You have the default "single" which is current.
 
Just after a quick look - it appears that the IV of the simulator at Oct. expiry is substantially higher than the current IV of the DEC. options - thereby supporting the price - offsetting time decay.
 
You are seriously long vega so if the IV gets whacked (and it looks elevated) then your position will get whacked as well. Model the P/L with an IV drop of say 500bp...
 
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