need an idea
- Thread starter Mdtbyk
- Start date
Chart reading ability to identify high probability patterns when you should hedge. Study 1000's of charts when extremes happen.
This doesn't exist. In fact, the entire theory behind option pricing is your counter party's protection against what you're looking for. Risk = Reward.
Took me 3 years and over 10,000 hours to learn how to use options for hedging and 97% of the time to not cost me anything. Very little is free when risking money and with so many now using science, there are teams much smarter people than me with programmers working 24/7 to beat the game by small amounts, but doing it enough times... So much studying, even when you sleep, I never realized in school how physics is so hard 40 years later.
Check out long put synthetic straddle. A note of caution; go out at least 90 days, 120 is way, way better, on the options. Liquidity is a high priority (OI in the thousands) so you don't get screwed
. And don't stay too long if everything starts going sideways. Use money management, preserve capital.
So, you want to have your cake and eat it too? Not going to happen. The closest to that probably, is if you have a large profit in a stock or option which has run so much in one direction. Now, you want to keep your position and not close it out! So, you buy say a put option to sell your shares at a specific price. Say XYZ stock which you bought at $20 is now worth $100. You have an $8,000 profit on 100 shares. So, you buy a put option with strike at $100 good for say, 20 days. XYZ stock goes to $150 and you still have your 100 shares. Your put option cost you say $300. So, now you have $13,000 paper profits less the $300 you pay for the put option. So, now you buy a new put option say costing $500 for a $150 strike put option good for another 20 days. You can sleep like a baby. Of course, nothing is free. You have now spent $800 of your profits for protection. Of course, your upside is unlimited theoretically, atleast!
Dream on...won't happen..Risk is the name of the game..