Hi, haven’t started studying for my Lvl 2 yet but i have a question. Can you confirm that the beta of buying a Put on SPY is negative? BB is showing 1.9 - shouldn’t it be negative 1.9? Thanks
Why would the value of a put increase 1.9% for every 1% increase in the value of the underlying? Puts decline in value when the underlying increases. It should be negative … I think.
What does “beta of a put” mean? What BB page are you looking at?
Beta of a put?
Why couldn’t you calculate the beta of a put? Just because nobody else does it? Covariance (Put, SPY) / Variance (SPY)
cjones65 Wrote: ------------------------------------------------------- > Why couldn’t you calculate the beta of a put? Just > because nobody else does it? > > Covariance (Put, SPY) / Variance (SPY) Because put delta is not constant, so the beta will not be static. You can do something like {Beta_underlying*delta} to get a sort of normalized delta.
interesting …
If people are long puts as the market is falling beta will be negetive. BUT, if most people bought puts in the expectation of a falling market (market going up), it could be positive. also, puts are bought for a number of strategies…including hedging. there’s a number of reasons it could be positive because options are someone’ guess on more factors than just the direction of the underlying.
Delta of a put would be negative since the price of the option would decrease as the price of the underlying increased. Ive never heard of options having betas but that doesn’t mean it’s not possible.