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Hedging


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#1 traderx

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Posted 29 July 2020 - 10:30 AM

What does it  indicate if your portfolio is increasing in value and you hedge is making money too?



#2 redfoliage2

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Posted 29 July 2020 - 10:51 AM

Then you need to see how much the hedge makes when your positions decreases in value, i.e. how good is the hedge when the value of your positions going down.  

To hedge is to deal with unknowns like at this time no one knows how the market will react to the Fed words/actions.  I'm long index futures and I must have them hedged today..................


Edited by redfoliage2, 29 July 2020 - 10:52 AM.


#3 traderx

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Posted 29 July 2020 - 10:52 AM

Thanks red



#4 alexnewbee

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Posted 29 July 2020 - 10:58 AM

What does it  indicate if your portfolio is increasing in value and you hedge is making money too?

then it is not a hedge. napoleon.gif


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#5 traderx

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Posted 29 July 2020 - 11:09 AM

when i run correlation about -30 for portfolio and hedge, very uncorrelated 



#6 traderx

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Posted 29 July 2020 - 11:17 AM

short term results maybe a quirk which will change



#7 pdx5

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Posted 29 July 2020 - 11:38 AM

Only good reason I see to use hedge is to avoid short term capital gain.

A real Hedge reduces your profits and it is like betting against your own thinking.


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#8 traderx

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Posted 29 July 2020 - 11:44 AM

Hedging smooths out your volatility.

I also have done the income tax idea, you mention, for long term capital gains. That is different



#9 Darris

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Posted 29 July 2020 - 12:37 PM

The VX Aug contract possibly fits your scenario, and historically implies we may see a dip in equities towards the close and or Thursday.  Market internals seem really strong for the gap and go today, but I am moving to the sidelines with no skin in the game.  Since we went back to break even for the week last night on the ES around 3204 it seems like we might just hit the week's high at 3246 and pull back again.

 

On a side note about GLD/SLV, I remember an old end of month trading system that would only be long the strongest relative strength issues based on those end of month closing prices.  Not sure if the system was long GLD/SLV based on the relative strength based on the closing prices for Jan 31, 2012, but both had a great run into Feb 28, 2012, and then got slaughtered on Feb 29th giving up most of the gains.



#10 traderx

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Posted 29 July 2020 - 12:49 PM

The VX Aug contract possibly fits your scenario, and historically implies we may see a dip in equities towards the close and or Thursday.  

 

 

 

Thanks Darris , I am using qqq micro Sept.

Either better?