Friday, October 30, 2009
Straddle Spreads
Hey guys, I'm going to look at the prices over the weekend but I'm interested in buying a straddle spread. I think we're either going to see big downside, or after some consolidation we'll see the continued climb. Either way I think we move from here. I lose money if the market trades sideways with little volatility. Mark, your boy Fitzpatrick just went bearish on national TV.
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Are you looking to buy straddles on the S&P 500? Are you going to buy staddles that are at the money? What is your strategy? What could you do to hedge yourself?
ReplyDeleteJust curious.
Yes on the SPY, I haven't decided yet on ATM or OTM, I still need to price that out. My strategy is to make money, I'll probably do a March expiration, we'll see, it depends on the premiums. It depends on what you mean by hedge. I'm willing to take on some cash risk. I won't be trying to put these on for no out of cost expense. To do that I can either do a ratio spread or calendar spread, but those just change the risk metric and don't abolish it. We'll see. I've felt I wanted to do this before only to find the premiums so expensive that I no longer wanted to play.
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