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Simple test, would your hedging strategy have protected you from being
short puts on 9/11 when the market was closed for a couple of weeks?
Would you already have had your protection in place if you'd shorted
puts the day before the crash/market-closure, considering that Sept
hedges would have expired worthless after the closure? If so, I'd say
you've covered your risk pretty well.
> I would like to declare the "selling of deep-out-of-the-money options" a strictly
> a game
> of skills and understanding of statistical properties of market returns etc. If
> you follow
> my recipe than there is NO 1% of "sheer terror". All cases of "extreme" market
> conditions
> (that bankrupt gamblers like Victor N.) are handled with "business as usual"
> attitude.
>
> So, you don't need any luck (but you need badly a math knowledge of markets), and
> there is
> no fear involved in market extremes ("fat tail" events), just a simple hedging
> invoked
> with a proper timing.
>
--
Dennis
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