Your Worst Trading Enemy.. You Message Board

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Strategies & Market Trends : Your Worst Trading Enemy.. You

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To: RobQ who wrote (211)	2/6/2001 10:50:04 PM
From: KFE	Read Replies (1) of 223

RobQ, Did I miss a way to "hedge my bets" on my long term holding without dumping the shares? Option strategies can be constructed to hedge just about any position. Constructing option strategies that will be profitable if the underlying stays the same, goes in desired direction, or goes slightly against the desired direction make up the bulk of my trading. Keeping with the theme of the thread these favorable risk/reward option strategies are possible because of greed and fear on the part of traders which cause some options to be overpriced vs. others. I believe that all equity traders can enhance their returns by understanding options. For example, you might want to short a stock that can't be borrowed or uptick/upbid rule is preventing you from shorting. You can do a synthetic short with options by selling a call and buying a put with the same strike and get the same profile as shorting the stock. I have found trading options easier emotionally than equity trading because it is just a mathematical exercise. Regards, Ken

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