This is the thread where you can post your contrarian positions which use derivatives to get their exposure (options, ETFs, futures… more exotic?) It is also the place to discuss which derivatives (or derivatives on derivatives) would be the most quality and effective instrument to get the job done for various underlyings.
(I was hoping some of the discussion going on in “trading volatility” could move here)
Are you suggesting or are you going to do it? If so, how? (short the shares, buy the puts, sell the calls, some combination… what date, strike and expiration)
Hey, what do you mean by the notation “limit.2 sell@.3”?
At first I was thinking, at least with TWTR having earnings in two weeks, that you would buy the puts expiring that week and take advantage in the spike in IV. However, the decay on these near term options really suck. Perhaps the Jan 17 are best.
also, banks to hedge crappy tech… what?
EDIT: oh, duuuhhhh… “limit .2 sell@.3” mean looking to get filled at .2 and the eventual sell target is .3.
why not just SPY calls in the delta that would give you the desired exposure to neutralize your risk?. Those options are very liquid. Banks seem like such a sketchy and unpredictable move right now. (still struggling since brexit… earnings next week)
Not sure that math actually adds up but we’ll roll with it. I like the call simply due to the fact the shorts you picked are crap and I think financials are due
BTW, we can now write covered puts against our shorts while we wait.
Guessing a lot of people don’t believe this rally. I was just checking and they are willing to pay big for Oct31 2100 puts on ES futures (just before election). Any slight interday down, and should be able to get a 3% premium payment for holding our shorts another 3 months. Then wait, if the market keeps going up this makes my 2110 shorts profitable until 2173. If the market goes down then I get closed out of my short. Basically I just write into perpituity until they come to their senses, income in a sideways market.
Might do that on part of my short postion, keep part open so partially-hedged against major downturn. Grinding away…
Yea, that’s what those guys on that video were doing. Just patiently carving down their cost basis. You can write puts against your short contracts. You have meat on the bone to manipulate. For myself, my cost risk started out small. I would have to actually increase my risk if I tried to add short put now. I would not be able to get any premium below my cost basis at this point. I’m actually loving my position and the way things are playing out. I’m only down $9/contract. So, go ahead and rally now… the delta on my position is weak. The later the pull back comes, the stronger the delta will be. I’m starting to realize this about contrarian positioning: it is not about timing or even being right. It is about exposure and not being overleveraged. Nailing the exact molment of a pullback is a crap shoot. However, given you are not over exposed, you can clean up almost any mess you get into given time… or better yet, you can afford TO WAIT TO BE RIGHT.