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I accept that you can use options to hedge etc but that's not really a secret.
Does anyone have a link to an article about hedging using options. Not that I'd even consider trying it at this point but I am very curious.
Or
How would someone hedge a a long position in the ES? Price only goes up or down.... If you're long ES and you write a option and the ES goes in your favour and your option is written (i think that's short?) aren't you now haemorrhaging $ via the option?
Buying a put option costs money but it allows you to sell at a certain price in the future. I am no options expert and it's been a while since I have looked at it and the pricing and how they work is complex and I don't pretend to know the maths in terms of working out pricing. However, say you have an instrument that is worth $1 per point and it's currently at 1000 and you buy in at the 1000 level. You could buy a put option, which is a right (but not an obligation) to sell, at 800 at some point in the future. Because you are buying a right to sell at 800 this is called an out of the money option. No one would sell at 800 since they could sell for 1000 right now. If the price drops to 801 at the date of the expiration of the option your option is completely worthless since no one will sell at 800 if they can get 801. However, if the market drops to 500 you have the right to sell what you previously bought at 800 and the person on the other hand has the obligation to buy at 800. Now you have lost 200 points but you could have lost 500. You did not. What happens though is that options get priced differently. 500 would be very out of the money. An option to sell at 900 would be more expensive. You pay the premium on the option price, so it doesn't represent the full value which means you can still profit but your profit is going to be reduced by the premium you had to pay for the option.
Does anyone have a link to an article about hedging using options. Not that I'd even consider trying it at this point but I am very curious.
Or
How would someone hedge a a long position in the ES? Price only goes up or down.... If you're long ES and you write a option and the ES goes in your favour and your option is written (i think that's short?) aren't you now haemorrhaging $ via the option?
I am very afraid of shorts. I am too uneducated: working out when a stock will fall and thus take out a short. When does someone know their limits or where their limits of understanding of trading?
Trying to following this thread, it only confirms that I don't even know what I do not know. Did Joe pick the wrong stock? Was it bad timing because some unexpected fantastic news made it rocket up?
Is this "mistake" very easy to repeat? Should I leverage a short or two on some random stock and see if I can beat his losses?Has anyone experienced a "Short Squeeze"? Rather than tell me what is a short squeeze, please tell me the emotions you were feeling as you scrambled to cover your positions. Joe Campbell didn't even get a chance I think.
You definitely did say you turned a 5 figure gain into a 5 figure loss though so your profits were completely wiped out and then some. I don't think that's important, it was more to indicate your position sizing was too high.
I'm out here. Merry X-mass and happy new year everyone.
First we lose the Duck
Now we lose the tribal trading elder
A GSL is probably cheaper than hedging with options though. I know that is a huge can of worms and it depends on minimum stop distances, and maybe it's not true for some high risk stops. However, I think it's true most of the time, at least for indices and blue chips.
Cynic is going to be a cynic though and say that the OTC provider will hit your stop deliberately by marking up their price. Maybe, maybe not. That's just another can of worms.
My thousands of trades and years of experience with OTC providers and their products alone is ample justification for my assertion that one's contingent orders do indeed influence the price action. Hence my aversion to any strategy intraday or otherwise that requires the use of stop orders.
If what you are saying is true... it can be done 2 ways.
1. They move the underlying market to get to your stop.
2. They simply move the quoted price specific to your account to get to your stop.
To verify which of the two, may be you can open 2 live accounts, under different names, with the same CFD provider and see if the prices offered to each account is the same at all times, especially when you have an open position with a stop order...
With regards to Joe Campbell in the OP.
Wonder how much I'd be able to raise if I gave out my sob stories...
Whether the story is true or false, I wouldn't give the greedy numb nut a red cent. I may be callous but greed really does have a nasty bite!
Now, even though he may have perceived a low risk/high reward trade, the fact that he was chasing high reward he surely would have been well aware of the hightened risk but, chose to ignore the possibility that the trade could go pear shape by not having a stop loss (or other stategy) in place.
Then when it does go all pear shaped, goes and cries to the Crowd Funders oh woe is me. Prft! I have no sympathy.
He was greedy and paid the penalty. Unfortunately it is a sad indictment of the world we live in, far too many live (or gamble/punt) far beyond their means and when it all goes south, oh woe is me. FFS! Grow a pair, man up and take responsibility for your money.
No doubt due to the back lash and a smattering of guilt he's pulled the page down, that's something I suppose. Nice little 5k+ pick up from the schmucks though. If I sound harsh, so be it.
How come there are no famous traders?
How come there are no famous traders?
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