What Options Plays are available in this situation ?

B

beginner66

Hey folks

Im a newbie re options (actually little idea in fact)
i was wondering if the experienced option players on ET might part with some of their wisdom on the following situation .....

How would you hedge if you went short from the RED line shown and if you believed with 100% certainty that price will go to the blue line within the next 5 days ? Say we dont know though how high price will go in this case and thus i want to minimise the "heat" very soon after going short at the red line price....
Very grateful for any Option advice.
thanks, best John

upload_2022-6-11_14-33-42.png
 
If your short, then you hedge by buying a call.

Or, you could have simply initiated the trade by buying a put in the first place. The limited-loss profile of a put means you don't need a hedge.
 
beginner66 said:
Hey folks

Im a newbie re options (actually little idea in fact)
i was wondering if the experienced option players on ET might part with some of their wisdom on the following situation .....

How would you hedge if you went short from the RED line shown and if you believed with 100% certainty that price will go to the blue line within the next 5 days ? Say we dont know though how high price will go in this case and thus i want to minimise the "heat" very soon after going short at the red line price....
Very grateful for any Option advice.
thanks, best John

View attachment 286541
More...

If you know with 100% that the price will go down from where you shorted, why would you still want or need to hedge? It would be a waste of time and money for you. LOL You would just short and then wait for the price to come down to your expected price target and then take profit.
 
TheDawn said:
If you know with 100% that the price will go down from where you shorted, why would you still want or need to hedge?
More...

100% certainty....with that kind of foresight...you can get rich fast with options. Bet the farm on your judgement call.
Insurance is a beautiful thing...if you know an incident or event or accident will likely take place. That tiny premium contract has exploded in value.
 
MacBookProHo said:
100% certainty....with that kind of foresight...you can get rich fast with options. Bet the farm on your judgement call.
Insurance is a beautiful thing...if you know an incident or event or accident will likely take place. That tiny premium contract has exploded in value.
More...

Like I said, if you know a certain outcome with 100% certainty, not even with a shadow or a ghost of doubt, why waste your time and money on hedging or insurance? It's totally not needed no matter how beautiful it is. So OP's question is an oxymoron.
 
earth_imperator said:
Is it this product? :
"
Mini Dow Jones Indus.-$5 Jun 22 (YM=F)
CBOT - CBOT Delayed Price. Currency in USD
31,437.00-826.00 (-2.56%)
At close: June 10 04:59PM EDT
" ( https://finance.yahoo.com/quote/YM=F?p=YM=F )

The OP talks of options, but the above YahooFinance site does not list any options for it.
Any further info? Volatility/ies?
More...


Yes earth_imperator that is the product say
I guess xandman said i should buy a naked call as the hedge tool for when i get in at the red line. like you i was wondering is there a call option for this instrument say ? so i found this on the CME
https://www.cmegroup.com/markets/equities/dow-jones/e-mini-dow.quotes.options.html

so this might lead me to the Call answer that xandman talks about.
thank you
 
TheDawn said:
If you know with 100% that the price will go down from where you shorted, why would you still want or need to hedge? It would be a waste of time and money for you. LOL You would just short and then wait for the price to come down to your expected price target and then take profit.
More...

yes true TheDawn sometimes the price can go against 1000 YM ticks (this has been roughly worse case I have experienced) and 3 days later it hit my target. I would like to avoid when i get in too early...of course i can not take as many setups... ie wait for the larger ones.
 
You could hedge buy buying an ES future as well. When you think the heat is over, close the ES position. This is called an index spread. In your case, it would be more accurately called a cross hedge. (could buy like eight or nine MES instead of a full ES as well).
 
You must log in or register to reply here.
Back
Top