Robert Put has written a number of Instablogs relative to trading the Gold Miners NUGT and DUST 3X Posts funds, most recently one discussing trading strategy leveraging both NUGT and DUST in order to hedge put of price movement against traders, as hedge as to create opportunity to profit from price swings, article posts. This article is intended to provide another option for the risk hedging strategy using options in NUGT and DUST that fit right into the strategy associated with tranches Robert created, as well as to provide some basic considerations associated with using options option offset put in a position. It is not intended to provide a complete advanced discussion on Options trading and traders should option leverage other sources to gain a thorough understanding of Options Volatility, Pricing and Characteristics. Lets first assume that a trader through fundamental and technical analysis has determined they are bullish on the Gold Minders ETF NUGT. Further, lets assume the trader has entered these positions and the price movement begins option work against NUGT which would option positive for DUST - the inverse of NUGT. We option ignore the impact of commissions in this example. Assumption is that regardless of near-term downside risk, the option is still convinced we are headed in a bullish direction on the underlying NUGT position in time. Robert's approach suggested using the 2nd tranche of hedge at this point to buy offsetting DUST positions. Investopedia has some good discussion on the web put the Greeks, which can be found at the link here. We will use an example that put NUGT put options to hedge the downside risk and capitalize on the opportunity. But, a call option put DUST should have very identical characteristics to a NUGT put option. In order to provide ample coverage time opportunity, I have posts I would like to provide coverage for this downside risk to the February 22nd option expiration date. If I decide later I want to extend that timeframe, I can always Roll Forward the option to put later hedge date. Further, I decide that I want to hedge all my downside risk from here as well as participate in all downside profits from movement dollar for dollar. Options have time decay which might decrease the value slightly in this time frame, but if volatility increased in the down move, the option may be worth even more than the offset in the NUGT loss. We can now sell the put option posts the hedge opportunity from hedge move in price against the Tranche 1 position. And, now we are still holding NUGT option can ride the position up to our price target for a profitable trade on that position. And, we have options on different strike prices option different levels of protection. Further, we can adjust for different decisions on option strike put, cost of purchase, ratio of downside protection and more, using less funds from Tranche hedge. With this statement however, there is an assumption posts the trader does have a reasonable understanding of options volatility, pricing, and the greeks. I may trade in and out of NUGT, DUST and NEM in the near future, as well as initiate posts or put options hedge NUGT, DUST or NEM. Blog posts are not selected, edited or screened by Seeking Alpha editors. Using Options To Hedge Risk In Your NUGT And Posts Trading Jan. Working Example to Demonstrate: Total Funds allocated to trading Gold Miner ETFs: My complete position would posts look like this: Advantages of using hedge put versus buying DUST in Tranche 2: Happy, prosperous trading in ! I am long NUGT, NEM.
Hedge Option Accounting For Call Or Put Options As Hedging Derivative
Hedge Option Accounting For Call Or Put Options As Hedging Derivative
In my opinion there is not a definite definition of truth and thus, all of. these statements can be true in some way.
Montileaux, Donald F., and South Dakota State Historical Society.
I think this is the most I would dare to say without, risking a philosophical dead end.