If you buy a put you will have the same time decay.
You can buy a 60 dte call and sell it at 30 dte to minimize the decay
You can buy a 60 dte call and sell it at 30 dte to minimize the decay
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Protective put on S&P mini futures
- Thread starter farmerjohn1324
- Start date
If you buy a put you will have the same time decay.
You can buy a 60 dte call and sell it at 30 dte to minimize the decay
Would 90dte buy and 60dte sell be better? Or is this so far out that it doesn't reflect current price well enough?
A 90 dte call will be more expensive then thee 60 dte. The time decay is lower but you will lose more if the market has a big correction.
A 90 dte call will be more expensive then thee 60 dte. The time decay is lower but you will lose more if the market has a big correction.
Ok. So right now, the price difference between 60dte and 30dte is 41.75. So I need an upward move of 41.75 just to break even. Does that sound sensible? Especially knowing that I have no choice but to sell in 30 days to avoid accelerated time decay?
Naked call?
What do you mean "naked"? That is usually used discussing short option positions.
I am saying you can replicate your proposal of long underlying + protective put via a long call position.
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I want to do a protective put on the S&P mini futures. This would mean buying the futures contract and hedging it by buying a put option on the same contract. My question is....
I would like to have done this with the Micro e-mini because as far as I know it's the same thing, but just allows me to subdivide more so I can be more detailed with quantities. However, my brokerage (Schwab) doesn't offer options on the Micro e-mini, only on the normal e-mini. This is despite the fact that CME website says that options on Micro e-mini do exist.
So would it amount to the same thing if I bought Micro e-mini and bought put option on regular e-mini, as long as I sized everything appropriately to account for this?
It will be close but it won't be the same thing because each instrument moves differently as far as trading goes because of various factors like supply & demand factors and etc.
What are the best option combos for unlimited upside and limited downside?
A long call by itself. You don't need to hedge it with anything else. It's already hedged inherently.
Ok. So right now, the price difference between 60dte and 30dte is 41.75. So I need an upward move of 41.75 just to break even. Does that sound sensible? Especially knowing that I have no choice but to sell in 30 days to avoid accelerated time decay?
You should just buy a 30 dte call. Time decay can be horrendous especially if there is a dramatic drop in volatility. Given that there is already an FDA approved over-the-counter anti-covid pill that results in 89% cure rate, chances are covid is about to be over and there won't be much volatility barring something else happening.
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You should just buy a 30 dte call. Time decay can be horrendous especially if there is a dramatic drop in volatility. Given that there is already an FDA approved over-the-counter anti-covid pill that results in 89% cure rate, chances are covid is about to be over and there won't be much volatility barring something else happening.
Time decay is horrendous even without volatility.
Right now, it would have to go up 75 points just to break even. With a futures contract, that 75 points would have profited me $3750
Time decay is horrendous even without volatility.
Right now, it would have to go up 75 points just to break even. With a futures contract, that 75 points would have profited me $3750
Even with volatility you mean? Yes that's why if I were you, I would've bought futures and just hedge with an OTM put for insurance. At least that way you have a 1-delta instrument and with no time decay.