OmniTrader Forum OmniTrader Forum
forums calendars search
today this week
 
register logon control panel Forum Rules
You are currently browsing as a guest.
You should logon to access more features
A Self-Moderated Community - ALL MEMBERS, PLEASE READ!
Vote for Members who contribute the most to your trading, and help us moderate content within the Forums.


Only Forum Moderators, Administrators, and the owner of this message may delete it.

 
Jim Dean

Sage
20001000
Posts: 3022

Joined: 9/21/2006
Location: L'ville, GA

User Profile
 
Subject : RE: ATM Hedging feature
Posted : 2/19/2018 8:59 AM
Post #44108 - In reply to #44107

Hi, Vinay

First, re repeatedly buying Puts ... Ed dealt with that cost in his webinar ... what he didn't spend a lot of time discussing was that every week/month when the put was rolled over, some of the old one's cost (unspecified) would be recovered when it was sold. Yes, there will be a net cost ... it is insurance for a price ... but Ed made that point. However, Keith's comments lead me to believe that the benefit from exercising the Put in the event of a crash will be less than Ed implied ... but he never actually quantified it since the sale of the Put was never tabulated. Hopefully that will come as N continues work on this.

Re the classic trailing stop and diversification methods ... I was *not* proposing them as ideal nor completely effective solutions! Rather, I was trying to point out that using them *wisely* (and that's an important qualifier) can sometimes *ameliorate some* of the crash impact. Why?
a. really big crashes often last more than one "bar" ... a tight SM would at least end the trade before another bar makes it worse, in those cases.
b. during many med-large crashes, there are usually *some* symbols that *don't* crash ... esp if they aren't a part of major indexes. Admittedly it's tricky to predict which symbols might benefit from this disconnect ahead of time ... BUT if there's a lot of *intelligent* diversification in the portfolio, then there's a reasonable chance that *some* of the symbols might make it ok.

So, to repeat ... tight SM orders and wise diversification can HELP in a crash ... but they can't completely obviate it.
Deleting message 44108 : RE: ATM Hedging feature


Nirvana Systems
For any problems or issues please contact our Webmaster at webmaster@nirvsys.com.