hansheng

Thanks for your sharing Chris.

Thanks for your quick response. So I guess this is why you said adding some opposite delta into your current portfolio is "partially hedge". Umm...just a dumb idea...Do you think it make sense to standardize the delta with respect to its stock price? Like we can divide the delta by its stock price, and then based on the "new delta" to make our portfolio to be neutral. Thanks!

Hi Kim, One question for you. Assume I have only 2 trades in my portfolio. One is 50 KEY calls with 1483 deltas and the other one is 3 WMT puts with -132 deltas. In IB portfolio manager, it just sum these two numbers together so I have ~1351 deltas in total. In order to be delta neutral, I can add around 31 WMT puts. However, since the KEY stock is so cheap(around $7.4), it's very difficult to move one dollar in the short timeframe. Relatively speaking, WMT is at $67.8 and can be easily up or down for 1 dollar. In this case, though it looks like delta neutral, actually my profit or loss will largely affected by WMT trade, right? Do I overlook or misunderstand anything? Thanks so much.