I long a stock for 90 days and i want delta hedge this position. I have the option of 1 3 6 9 month call, put options to purchase. According to Schweser, any of them will do the job!??
How??? I mean i know i can buy 1 month calls and then after 1 month i buy again and after that again to cover 3m , right? But whybon earth i would wanna do that? Is it cheaper that way?
I guess there is tradeoff here, if you roll over, you have more flexibility. call price do change overtime. if later stock price decrease, call price will decrease keep other things constant, so you can pay less. my opinion only, correct me if I am wrong
I think you can use any time b/c its dynamic so therefore you will always be buying/selling more options as the price changes. You are only trying figure out the hedge today so for today any time period will work.
an opinion as well…
exactly how i think it works! it’s importatnt to have a required number of options on date when you want to settle the contract. but before this happens, everything changes (stock and option prices) and you just juggle with these all the time to keep the hedge effective.