short strangle hedged with futures

Quote from Carl J:

write a ndx strangle one or two weeks from exp.
if the index stays in a narrow range no action needed
if the index runs hard in either direction hedge the losing leg with the correct number of nq mini's
at exp. if the losing leg is properly hedged you will have a wash on that leg and the other will expire worthless collecting the entire premium
the tricky part is when to put the hedge on and when to take it off.
any merit to this strategy or is it full of holes?
More...

The hedge has to be pro-active, not re-active as in this case. In other words the position is hedged at time of open, not after you have sustained a loss. You have unlimited loss on the short strangle and the futures, THAT'S INSANE.





forex-forex
--------------
Trading guru
 
You must log in or register to reply here.
Back
Top