It's a matter of how much time and stress you can deal with. When Q was going up my puts were getting killed, but I was making mucho dollars on the leaps, so I didn't care. However, when Q started down, even though my puts were making money, they were short term (Feb) and their premiums were fluctuating wildly. If I wanted to close out a position, between the time I put in a limit order and the time I could preview it, the price had moved beyond my limit. I mean, changes like 10-20% in minutes, and large spreads. So it is very hard to time the buys and sells, you have to be constantly watching your screen and dealing with the variability. Not for me, thanks.
I suppose a better way to do this, if you want to hedge, is to buy longer term puts, but then the premiums are so high, and the stock has so much time to appreciate, that hedging does not make so much sense. |
