Long put and market crash

Thanks all for your answers.

The way I understand the second point of newwurldmn is that if the put has time value and the market is down, IV will probably be superior than realized vol so it is better to sell immediately. Delta hedging would bring less return. Please correct me if I am wrong
 
Quote from froluis:

Thanks all for your answers.

The way I understand the second point of newwurldmn is that if the put has time value and the market is down, IV will probably be superior than realized vol so it is better to sell immediately. Delta hedging would bring less return. Please correct me if I am wrong
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If you have the view that realized vol will be higher than the new implied vol you should delta hedge to capture this pnl.

If you have the view that realized vol will be lower than the new implied vol, you should go short volatility to capture this pnl.

But if you don't have a view and you are looking to lock in your profits, you are better served cutting the position than exercising and buying back to that stock or hedging it and waiting for expiration to collapse the position.
 
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