Kim 7,513 Report post Posted May 26, 2015 Options are similar to other financial security tools just like bonds, stocks, mutual funds, which can be purchased and sold at one’s convenience. Since these are less expensive than others, options have spread their roots across the market. These are ideal for short-term, as well as, long-term and are hence more profitable for users. Since individual investors have wider education resources, and multiple strategies can be implemented with options trading, these can be trusted for long-term use. Some of the elements of successful trading include controlling risk, technical analysis, buy and sell indicators, and patterns. However, investors must bear certain steps in mind while spotting out potential trade including keeping a watch over the moving average, understanding overall patterns, and comprehending market trends. All these short-term trading ideas and tricks are required to ensure success. Click here to view the article Share this post Link to post Share on other sites
DFD 0 Report post Posted June 19, 2015 Kim -- thanks for this. Quick question if you have a moment: do you have thoughts on how to best complement a volatility ETP (i.e., shorting VXX) trading strategy with options to mitigate excess swings in VIX volatility? I thought about purchasing SPY OTM 2-3 month puts to hedge against rising volatility and falling S&P 500 prices (both of which are inverse to a primarily short VXX strategy), but unsure if there would be a better way of hedging against rising VIX volatility (and not necessarily against falling SPY price). Share this post Link to post Share on other sites
Kim 7,513 Report post Posted June 19, 2015 If you want to buy SPY puts as a hedge, I would probably go with longer expiration. At Anchor Trades, we implement similar strategy and trying to pay for the hedge by selling short term options. Share this post Link to post Share on other sites
DFD 0 Report post Posted June 19, 2015 Good idea. Are you suggesting a slight diagonal calendar spread to neutralize the delta (and gamma as much as possible)? Looks like a short Jul 18 209 PUT would almost be delta neutralized by a long Sept 207 PUT yet have a Vega differential of around 0.18. Is that what you're referring to? Share this post Link to post Share on other sites
Kim 7,513 Report post Posted June 19, 2015 Not exactly. Anchor uses different number of long/short puts, so the number of sold puts has time value just enough to pay for the long puts. Share this post Link to post Share on other sites
