This is a subject near and dear to my heart because I'm a particularly neurotic trader. As posted on another thread, I live in NYC and am forever afraid of another al-Queda attack or some other sort of geopolitical catastrophe and ensuing market collapse. The result is that I almost exclusively daytrade options which is not only costly in terms of commissions and taxes, but I've also lost or missed out on untold thousands of dollars on next-day gaps on strongly trending stocks.
I don't think stops are worth a damn because almost all major news on any given stock is announced pre or post market, and there's no AH trading on options. So if you're long without protection, well, you're pretty much screwed.
I've thought about staying long my positions with puts on the $SPX, but I haven't quite worked that out yet, and since I trade high-priced high IV options almost exclusively, buying puts at the same strike as my calls (a straddle) seems needlessly expensive and an almost guaranteed way to lmit my profits considerably.
I trade large positions in same-month options on high-beta, high-volume stocks with, therefore, good spreads, and keep a constant eye on the $TICK chart and the S&P futures. This keeps me apprised of sell programs and other variables that almost always have a negative effect on the IV and options price (particuarly midday), but which are also almost entirely computer-generated arbitrage cash/futures spread trading that have nothing to do with my stock per se. So that limits the temptation to sell when these events occur.
Anyway, how to hedge and hold overnight? That's my question.
I don't think stops are worth a damn because almost all major news on any given stock is announced pre or post market, and there's no AH trading on options. So if you're long without protection, well, you're pretty much screwed.
I've thought about staying long my positions with puts on the $SPX, but I haven't quite worked that out yet, and since I trade high-priced high IV options almost exclusively, buying puts at the same strike as my calls (a straddle) seems needlessly expensive and an almost guaranteed way to lmit my profits considerably.
I trade large positions in same-month options on high-beta, high-volume stocks with, therefore, good spreads, and keep a constant eye on the $TICK chart and the S&P futures. This keeps me apprised of sell programs and other variables that almost always have a negative effect on the IV and options price (particuarly midday), but which are also almost entirely computer-generated arbitrage cash/futures spread trading that have nothing to do with my stock per se. So that limits the temptation to sell when these events occur.
Anyway, how to hedge and hold overnight? That's my question.
