Need help Hedging

C

cipherscribe

Say I want a hedge on my stock of MRVL, or RIMM. I'm guessing I'd use the NQ contract right?

How do I know how much stock I should have for each NQ contract?

I have done some simple stuff, like variances in Open/Close, but this varies wildly from thousands to tens of thousands of shares per contract, depending on the volatility of the day. Is there anything out there more robust in determining an appropriate hedge?

Any advice?

Adrian
 
Quote from cipherscribe:
----I want a hedge on my stock of MRVL, or RIMM. I'm guessing I'd use the NQ contract right?
----I have done some simple stuff, like variances in Open/Close, but this varies wildly from thousands to tens of thousands of shares per contract, depending on the volatility of the day.
----Is there anything out there more robust in determining an appropriate hedge?
More...
1) Yo Adrian! When "hedging", you want to be darn sure of the correlation between your underlying and the hedge instrument. An index future's correlation would tend to have too much variation to be effective.
2) Stock options would be more reliable.
3) You could just as easily offset the stock position and not complicate matters. :cool:
 
Ta muchly guys!

I was looking to go Long-stock, short NQ as a RTM strategy. I'll check out these options and see what works best.

Cheers!

Adrian
 
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