Questions tagged [hedging]
for questions that relate to hedging. A hedge is an investment position intended to offset potential losses/gains.
152 questions
0
votes
1
answer
142
views
Can shares be recovered from a broker you can't reach?
At the risk of sounding paranoid, I'm curious about how one mitigates the risk that your country could collapse due to internal strife.
Hypothetical:
Investor owns shares in two companies (A and B), ...
- 1,054
0
votes
0
answers
35
views
Currency hedging for intra-month expense FX rate risk as a US expat = only net drag?
I've been curious for a long time now about a specific hypothetical scenario for my personal situation. I'm a US citizen living and working long-term in Switzerland, and I've kept most of my day-to-...
0
votes
0
answers
76
views
Do market makers do gamma hedging on option futures ES?
Do market makers do gamma hedging on MES and ES and does that impact ES prices, or is the ES price only impacted by gamma hedging on SPX and SPY according to volumes?
1
vote
1
answer
61
views
Hedging Using Forward Contracts example from Hull's book
I am trying to learn futures and options from John Hull's book Fundamentals of Futures and Options Markets 9ed. In section 1.8, he has given an example of hedging using forward contracts. Following ...
- 113
0
votes
2
answers
122
views
Hedging with options
Online when I see people talk about using options to hedge, they always seem to talk about it in the put options sense.
For example you buy a stock expecting it go up, but then just to be safe you buy ...
- 59
0
votes
1
answer
441
views
How to properly hedge indices futures NQ by selling leveraged index options TQQQ or SQQQ?
Is there a formal futures NQ vs TQQQ options contracts hedging ratio calculation/strategy to tap on the fast decaying value of weekly expiry TQQQ options thereby creating an asymmetric risk-reward ...
- 29
0
votes
1
answer
128
views
Is it worth it to diversify the "risk-free" portion of a portfolio across multiple assets?
I am looking into the constructing of my own sort of "structured product" and have been thinking about the risk profiles of the "risk-free" portion of products like this.
Generally,...
- 103
0
votes
2
answers
138
views
On the meaning of Delta hedging
Basically, I'd really like to give a natural interpretation of
as prescribed by the Black-Scholes model for European derivatives, where O(t) is the option price and S(t) is the price of the ...
- 101
1
vote
0
answers
73
views
What is the best way to manage my savings and possibly increase my cash flow despite inflation in Egypt?
With the very quickly rising prices in Egypt, What is the best way to manage my savings and possibly increase my cash flow?
I’ve also got some ideas, Are they good or not?
Ideas that I have:
Work as ...
- 11
1
vote
0
answers
158
views
Why are CHF-hedged S&P500 ETFs performing much worse?
I would like to understand why in the following chart, the CHF-hedged ETF tracking the S&P500 is performing so much worse than the one tracking the S&P 500 in USD:
blue: ETF ISH CORE S&...
- 111
0
votes
1
answer
109
views
Forward vs Future rates
Looking at the market data for USD/CHF on investing.com and can't get my head around the difference between the forward and futures rates for this pair.
USD/CHF spot rate is 0.9898
MAR23 Futures ...
0
votes
1
answer
339
views
How to calculate break even price on delta hedged portfolio?
The underlying currently trades at 10. Suppose you have a portfolio consisting of:
1 Call at strike 11 with premium 0.4
A short position of 25 shares
Calculate the break even prices of this ...
1
vote
0
answers
103
views
What is the unhedged version of VBU?
I know I should be able to find this, but I don’t see it listed anywhere online. I want to find the Canadian version of Vanguard’s total US Bond index (BND), I see VBU but this is hedged against the ...
- 2,592
1
vote
1
answer
209
views
What does it mean to "hedge USD back to CHF"?
I earn in CHF, so I'm considering the iShares S&P 500 CHF Hedged ETF as a way of investing in the S&P 500 while also protecting myself against fluctuations in the USD/CHF exchange rate since ...
- 13
0
votes
1
answer
93
views
Delta hedging of stock portfolio using options
In the aforesaid delta hedging of stock position, how was the delta of long stock computed by author ?
In my opinion, total long position of 500 shares divided by the market lot of one put option ...
1
vote
1
answer
326
views
How Do I Construct a Long Short Portfolio Using Only Options?
I'm confused on how to construct a long short portfolio using strictly options.
If I wanted to hedge stock, I would long stock A and short stock B by making sure that the quantity * price of A = ...
- 113
2
votes
1
answer
153
views
Hedging a portfolio by shorting index - Margin calculations
I wish to run a long-only portfolio of stocks and hedge it during turbulent times by shorting a correlated index.
I'd rather short an index ETF for hedging instead of flattening my position. My ...
- 119
0
votes
1
answer
64
views
(Stock)/Option Positions
I'm studying for my SIE, and I have a question along the lines of Difference between naked put, covered put, protective put. Can someone help me fill in my "??"'s?
"Long (stock)/Long ...
- 101
0
votes
2
answers
158
views
Protective put became ITM before expiration. How to prevent option exercise?
Options beginner here. I have a protective put on a stock and it became ITM 2 days before expiration. I do not want the option to be exercised, since I’m bullish on the stock, and want to continue ...
- 7
1
vote
2
answers
129
views
How are borrowings in local currency used to hedge foreign exchange exposure on investments?
The following appears in Jardine Matheson's 2020 annual report's Financial Review section:
Treasury Policy
The Group manages its exposure to financial risk using a variety of techniques and ...
- 17.2k
0
votes
1
answer
234
views
Are there good ways to hedge against a combination of high inflation & rising rates?
I have saved some money that I would like to use in the next 1-3 years to start a company. In the meantime I would like to make sure that inflation does not eat up into my accumulated capital. I am ...
- 265
0
votes
0
answers
30
views
Benefits for option dealer delta-hedging an inter-dealer OTC equity option
What benefit(s) is (are) attained by options dealers in bilaterally exchanging the cash for shares to delta-hedge an inter-dealer OTC equity option they are trading?
- 1
2
votes
2
answers
411
views
Can a buy order be skipped when price rises rapidly?
I would like to know, if it is possible or likely, that an "out the money" share buy order would be skipped, when a stock prise rises very rapidly.
Context:
I have 466 shares of tesla. I ...
- 365
36
votes
12
answers
9k
views
Hedging vs just betting less
This is a question from a layperson about the fundamental concept of hedging, with regards to investing, gambling, and any situation in which hedging is used to manage risk.
I do not understand why ...
- 469
0
votes
1
answer
218
views
How to hedge/protect my stocks that do not have an option chain?
I've recently invested in a couple of OTC stocks (1st time exploring the OTC market) and unfortunately there's no option chain available. Question is, how can I protect those stocks in particular from ...
- 5
0
votes
2
answers
401
views
Can I hedge on a long position of less than 100 shares and if not is there an alternative strategy?
Good Afternoon All,
Quite frankly I'm stumped. I am aware of a covered position under normal circumstances, however in this particular situation there are less than 100 shares and I'd really like to ...
- 5
3
votes
3
answers
74
views
Do taxes on hedging apply between a tax sheltered and non-sheltered account?
I have been reading that there are various tax laws that prevent one from doing things like locking in one's short term gains on a stock by purchasing (or selling) options, or resetting one's cost ...
user12515
3
votes
1
answer
63
views
Protect "Riesterrente"-retirement account from downside of liquidation
My mom has a german retirement portfolio called "Riester-Rente". Portfolio is mix of bonds and an international fund (DE0008491051).
Long explanation:
As part of legal compliance, they need ...
- 131
2
votes
1
answer
176
views
Is this "forex protection" strategy sane?
Background: I started playing with the stock market in April-May, drawn by the huge rebound. Since then, I have made what I think is a decent return, except...
I live in the EU, and most of the ...
- 57
0
votes
0
answers
54
views
Hedging warrants & cashless exercise
For a given SPAC where the strike on the warrants is 11.50 and each warrant translates to 1 common share, if the company opts for cashless exercise and announces it will deliver 0.37 shares for each ...
- 1
-1
votes
2
answers
115
views
How to get fiat liquidity on BTC assets
I am bullish on BTC and at the same time I need some fiat liquidity right now. Is there some combination of financial products I can use? As an example:
I have 10 BTC (assume current FX $10,000)
I ...
- 1
20
votes
7
answers
5k
views
Can I hedge my household expenses using the financial markets?
Apparently farmers can hedge against high raw material prices and low crop prices by using financial instruments such as forwards and futures. Can I use financial instruments to similarly hedge my ...
- 17.2k
1
vote
2
answers
118
views
When commodity prices rise, do commodity production companies produce lower returns than the commodities?
Suppose I alone know that the price of a commodity will double next month, and will then stay at that level for years. There are two simple ways I could exploit this knowledge:
Buy the physical ...
- 17.2k
6
votes
3
answers
2k
views
How do I replicate a shorted stock and protective call option using options only?
Suppose a stock is currently at $100. I construct the following portfolio:
Short-sell 100 shares at $100
Long a call option — strike price: $105 (protective call)
The protective call option serves ...
- 17.2k
0
votes
1
answer
280
views
Stock portfolio currency hedging
I have a EUR cash account with Interactive Brokers and I trade US stocks. So I converted my euro’s for dollars. But now when my US /dollar stock portfolio is up but eur/usd is down it is hurting my ...
- 1
1
vote
1
answer
148
views
How would I actually use options (or ??) to hedge a currency?
I've never used hedging instruments to do anything other than day trade! :O
Say today I am in the US and I literally borrow AUD $100,000 from a friend in Australia.
She wires it along and I convert ...
- 13.9k
0
votes
1
answer
102
views
What is the meaning of asset underlying the futures contract?
I am reading a book of J.C Hull on Future and option where he explained the basis risk which is S2 + F1 - F2 or F1 + b2 I got this concept but reading further he expand above expression as F1 + (S*2 - ...
- 101
1
vote
1
answer
97
views
Buying Puts to Hedge Against Second Market Plunge - Suggestions?
FT recently reported that hedge fund managers are buying puts on:
stock indices and also on currencies sensitive to risk appetite such as the Australian dollar and the Korean won.
Generally, what ...
- 39
0
votes
2
answers
180
views
Gold and inflation
I am looking to use gold as an inflation hedge, however this article suggests it is not as good as one might believe. One thing I don't understand is that the inflation adjusted price is higher then ...
- 1,085
1
vote
0
answers
51
views
Does selling a related option affect the holding period for tax purposes?
Imagine the following scenario:
I purchased 3 LEAP call options on XYZ in 2019 with a strike price of $200.00, expiring over a year from purchase in 2021.
I also sold 3 call options on XYZ in 2019 ...
- 5,173
0
votes
1
answer
219
views
Is dynamic hedging a combination of writing covered calls and long puts?
Trying to figure out a simplified dynamic hedging strategy without getting into too much math. Based on Antifragile by NN Taleb, it appears an antifragile portfolio could be constructed with short ...
0
votes
1
answer
72
views
CFD Value % per time decline due to fees
The picture above shows example of SHL stock (1000 shares) value (vertical) vs time horizontal axes.
Redline shows ordinary SHL stock value overtime monthly. Greenline shows SHL STOCK+CFD value ...
- 1
-2
votes
3
answers
160
views
How can hedging possibly profit you?
To wit, doesn't hedging necessarily break even or lose money? I assume the semi-strong form of the EMH, defined in Zvi Bodie, Alex Kane, Alan J. Marcus's Investments (2018 11 edn). p 338.
The ...
user10763
-1
votes
2
answers
227
views
How to hedge against a potential collapse of the European Union? [closed]
I know this is unlikely, but the future of the EU looks bleak. The Coronavirus shattered the European states, making some override the Schengen Area rules and enforce cross-border checks.
I'm looking ...
- 1,307
2
votes
0
answers
76
views
Tail hedging with cash
Vineer Bhansali in his book Tail Risk Hedging makes some claims regarding portfolio protection:
For losses of 0% to -5%, just diversification
For losses of -5% to -15%, alternative betas (momentum)
...
- 21
1
vote
0
answers
27
views
Tracking inconsistency in FX-hedged accumulating ETF
I am looking at historical data for the iShares S&P 500 GBP Hedged UCITS ETF (Acc) Exchange Traded Fund (ETF), with Epic ID IGUS. The objective of the ETF is to track the performance of the S&...
- 123
0
votes
2
answers
104
views
Hedging currency in anticipation of relocating
I live in the US, so I use USD for daily activity, but I plan to move to the EU in <5 years and live there long term.
My portfolio is currently denominated in 80% USD and 20% other, but I don't ...
user32205
0
votes
2
answers
256
views
Long term LEAPs with calls written against them
I bought 3 LEAPs on XYZ at various times in 2019 which all expired in 14-17 months. I intend to sell or donate them once they reach long term status. However, I also wrote 3 CALL options on XYZ that ...
1
vote
1
answer
10k
views
What is the graph of hedging using put options?
An investor owns 1,000 Microsoft shares. The price is $28 per share. He is concerned about a possible share price decline in the next 2 months and wants protection. Buying ten July $27.50 put option ...
- 55
1
vote
2
answers
192
views
Hedging a major sell off
Inspired by What is the relationship between taxes and annual liquidation of the markets?,
If a major fund wanted to sell off enough stock to significantly affect market prices, could they hedge the ...
user32205