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Strategies & Market Trends : Canadian Options

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To: Porter Davis who wrote (1386)	5/13/1999 10:28:00 AM
From: Daniel Chisholm	of 1598

I secretly fear that someday soon the market's going to do one of these downside whoop-de-doos, only it's not going to turn around. As a specialist, do you tend to be usually net short premium? If so, how do deal with the possibility of a big whoop-de-doo (which, if I understand correctly, would make it difficult for you to stay hedged)? I.e., how do you reconcile risking enough of your capital (so that you can make a good market) vs. you staying in business through and beyond an '87 (or worse) scenario? My understanding is that traditional measures of risk and (dynamic?) hedging techniques are appropriate for 99.xxx% of the time. How do you (can you?) survive (the financial equivalent of) a tsunamai, tornado, etc? - Daniel

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