Can you be long and short at same time?

[tar]

so in a nutshell, it is possible
all that sh1t throwing for nothing

 

[graydrake]

Lord Flasheart I think graydrake is referring to an options strategy that aims to trade volatility rather than the direction of the market.

I dont know if Gregpearce32 is trading options but if he is just trading normally (outrights) then you're right it is pointless to be both long and short.

I had unsubscribed to this thread and had not seen this response before today

While it is true that a long and short position on a single ticker with the same strike and expiration accomplishes nothing except running up commissions, there are many long short trade combinations that are used by the 10's of millions every day. In summary this strategy uses different strikes with same expiration, same strike with different expiration or different strikes with different expirations.

Lets assume you are bullish on a ticker the next 3 months and you enter a long position with an Aug expiration. In addition, since it made a recent big short term run (or market conditions are short term bearish) you are bearish on the ticker over the next month, you might add a bear position expiring in a month. If you use credit positions in both, the value decay will move in your favor on both positions. Additionally, it the ticker stays with in your range you keep the premium sold on both the bull and bear positions.

This is not a part of my primary strategy as summarized in Forum Trading Strategy, Thread High Probability Credit Option Trades, but it is one I use regularly.

Drake

 

[Liquid validity]

Not necessarily , especially when scalping some may not even consider the long term trend at all .

Yeah if you are only scalping fair enough, trend may not even be a factor
at all if you specifically target ranges.

If you do scalp trends, I don't know about you, but I would much rather
scalp the trend direction than counter trend any day of the week.

 

[barjon]

I'm a bit late into this thread but let me pose a scenario familiar to most of you.

You are long, your instrument has been showing good momentum and has arrived at a price that would give a satisfactory profit, Suddenly, momentum slows and it takes a backward step. Is this a temporary blip, or the forerunner of something more major? You read the runes, but remain unsure. You are sure, though, that you don't want to lose the profit you have. What to do?

1. Exit and move on.

2. Exit re-enter if long momentum picks up (relies on a decent re-entry strategy)

3. Protect your profit until the position becomes more clear. A short gives you such insurance at small cost.

If you adopt 3 you have the following tactics in mind.

a) If momentum picks up to the downside you will close the long and put a stop tight above the price for the short. Most times this will stop you out of the short (at extra cost to the overall depending on where you've put the stop), but occasionally it will keep running your way.

b) If momentum picks again up to the long side you will cover the short and put quite a tight stop below the price for the long. (You are still long biased with this instrument so might have a slightly wider stop although that will increase the overall "insurance" cost if it's hit.

I trade UK equities and although I don't hedge by going short the same instrument I'm only a few steps away by using a pro rata FTSE hedge quite often

jon

 

[Liquid validity]

1. Exit and move on.

2. Exit re-enter if long momentum picks up (relies on a decent re-entry strategy)

3. Protect your profit until the position becomes more clear. A short gives you such insurance at small cost.

If you adopt 3 you have the following tactics in mind.

a) If momentum picks up to the downside you will close the long and put a stop tight above the price for the short. Most times this will stop you out of the short (at extra cost to the overall depending on where you've put the stop), but occasionally it will keep running your way.

b) If momentum picks again up to the long side you will cover the short and put quite a tight stop below the price for the long. (You are still long biased with this instrument so might have a slightly wider stop although that will increase the overall "insurance" cost if it's hit.

I trade UK equities and although I don't hedge by going short the same instrument I'm only a few steps away by using a pro rata FTSE hedge quite often

jon

1 or 2.
Hedging with a correlated instrument just reduces you risk exposure.
So in that sense its worthwhile, as you still have some risk, you also maintain
the possibility of reward.
Long / Short same instrument, same size gives you no exposure that you pay for in comms and spread.

Adjusting position size or hedging are completely different things to being flat.
I still fail to understand what value anyone can place on paying extra to be flat.
Its a psychological placebo, nothing more.

 

[Atilla]

1 or 2.
Hedging with a correlated instrument just reduces you risk exposure.
So in that sense its worthwhile, as you still have some risk, you also maintain
the possibility of reward.
Long / Short same instrument, same size gives you no exposure that you pay for in comms and spread.

Adjusting position size or hedging are completely different things to being flat.
I still fail to understand what value anyone can place on paying extra to be flat.
Its a psychological placebo, nothing more.

No not at all. Addenda: or perhaps it depends on the trader.

It depends on ones entry and exit decision wrt timeframes and strategy in use.

 

[Liquid validity]

No not at all. Addenda: or perhaps it depends on the trader.

It depends on ones entry and exit decision wrt timeframes and strategy in use.

Is anyone going to explain how paying extra to be flat is of any benefit?
Not talking about spreads, hedging or altering position size.
Its got nothing to do with strategy or timeframe.
It doesn't depend on the trader either, flat is flat fullstop.

Same size, same instrument.
Paying double to be flat.
Anyone?

 

[cablemonster]

I'm a bit late into this thread but let me pose a scenario familiar to most of you.

You are long, your instrument has been showing good momentum and has arrived at a price that would give a satisfactory profit, Suddenly, momentum slows and it takes a backward step. Is this a temporary blip, or the forerunner of something more major? You read the runes, but remain unsure. You are sure, though, that you don't want to lose the profit you have. What to do?

1. Exit and move on.

2. Exit re-enter if long momentum picks up (relies on a decent re-entry strategy)

3. Protect your profit until the position becomes more clear. A short gives you such insurance at small cost.

If you adopt 3 you have the following tactics in mind.

a) If momentum picks up to the downside you will close the long and put a stop tight above the price for the short. Most times this will stop you out of the short (at extra cost to the overall depending on where you've put the stop), but occasionally it will keep running your way.

b) If momentum picks again up to the long side you will cover the short and put quite a tight stop below the price for the long. (You are still long biased with this instrument so might have a slightly wider stop although that will increase the overall "insurance" cost if it's hit.

I trade UK equities and although I don't hedge by going short the same instrument I'm only a few steps away by using a pro rata FTSE hedge quite often

jon

Lol. Option 3 is not protecting your profit it is flattening out your position. Aside from spread it has the same mathematical effect as closing out your initial trade. You are not insuring anything you are flat. You cant hedge by going short the same instrument!

+1-1=0 no insurance = no hedge = flat.

All basic stuff........

 

[barjon]

1 or 2.
Hedging with a correlated instrument just reduces you risk exposure.
So in that sense its worthwhile, as you still have some risk, you also maintain
the possibility of reward.
Long / Short same instrument, same size gives you no exposure that you pay for in comms and spread.

Adjusting position size or hedging are completely different things to being flat.
I still fail to understand what value anyone can place on paying extra to be flat.
Its a psychological placebo, nothing more.

Lv

Absolutely, your are flat while both positions are on, but also with your profit protected. Fair enough that you have to pay an insurance premium to guarantee that position.

Aside from that the only benefit is that you have both cars sitting in the road with engines running waiting for Momentum Man to shoot past on his Ducati in one direction or the other. Course, if you already have entry strategies in place that would enable you to give quick chase then there'd be no point.

 

[Liquid validity]

Lv

Absolutely, your are flat while both positions are on, but also with your profit protected. Fair enough that you have to pay an insurance premium to guarantee that position.

Aside from that the only benefit is that you have both cars sitting in the road with engines running waiting for Momentum Man to shoot past on his Ducati in one direction or the other. Course, if you already have entry strategies in place that would enable you to give quick chase then there'd be no point.

Your profit is also protected if you just close the trade, without
paying extra.

I'm not talking from a stance of never having done this, I did all the
usual blind experimentation like this a good few years ago.
Only took me about 2 trades to realise it was worthless.
It only increases costs, there is zero benefit.

 

[cablemonster]

Lv

Absolutely, your are flat while both positions are on, but also with your profit protected. Fair enough that you have to pay an insurance premium to guarantee that position.

Aside from that the only benefit is that you have both cars sitting in the road with engines running waiting for Momentum Man to shoot past on his Ducati in one direction or the other. Course, if you already have entry strategies in place that would enable you to give quick chase then there'd be no point.

But you dont have a new position until you close one of the trades so any slippage still applies.

 

[barjon]

Lol. Option 3 is not protecting your profit it is flattening out your position. Aside from spread it has the same mathematical effect as closing out your initial trade. You are not insuring anything you are flat. You cant hedge by going short the same instrument!

+1-1=0 no insurance = no hedge = flat.

All basic stuff........

Yes, indeed. You are flattening out your position, or "taking your profit" if you like. But you've also got two open trades to play with. I've suggested one way you could do that - maybe to advantage, maybe not.

So +1-1 = 0 = 0 more profit = 0 reduced profit (other than costs).

 

[Liquid validity]

Yes, indeed. You are flattening out your position, or "taking your profit" if you like. But you've also got two open trades to play with. I've suggested one way you could do that - maybe to advantage, maybe not.

So +1-1 = 0 = 0 more profit = 0 reduced profit (other than costs).

You haven't its just an illusion.
What you have really done is this:
Buy To Cover Definition | Investopedia

100% market neutral.
The brokers just leave both positions open instead of letting them
naturally cancel (nice earner illusion), its still the same thing though - flat.

 

[barjon]

Your profit is also protected if you just close the trade, without
paying extra.

I'm not talking from a stance of never having done this, I did all the
usual blind experimentation like this a good few years ago.
Only took me about 2 trades to realise it was worthless.
It only increases costs, there is zero benefit.

Well, I've not done it either albeit I hedge with FTSE quite a lot.

Can you tell me, though, why the tactics I suggested if you did it are worthless?

 

[Liquid validity]

Well, I've not done it either albeit I hedge with FTSE quite a lot.

Can you tell me, though, why the tactics I suggested if you did it are worthless?

I've done many dumb a$$ things in my time, when I knew no better.
I quickly realised it was bo11ocks.
Not sure what the point is?
Its worthless because there is no advantage in paying extra to have no position.

 

[cablemonster]

Yes, indeed. You are flattening out your position, or "taking your profit" if you like. But you've also got two open trades to play with. I've suggested one way you could do that - maybe to advantage, maybe not.

So +1-1 = 0 = 0 more profit = 0 reduced profit (other than costs).

Ok so price shoots off north and you decide you want to be long again. To do this you have to close the short. You will get spread and slippage costs closing the short just the same as if you had opened a new long. So your ducati thing doesnt hold water.

Eventually you have to close both trades and pay 2 lots of spread when you could have just closed the original trade.

Unfortunately logic is a bitch and doesn't lie.

 

[Liquid validity]

Part 1 - so we accept one can be long and short at the same time.

Part 2 - is why would you want to be, considering the extra cost?

Answer: because the system/strategy/time frames in use are different.

1. Yes, f**k knows why though...

2. Poor asset allocation and strategy overlap approach.

Note: I am not talking about spreads, hedging or altering position size.

 

[graydrake]

But you dont have a new position until you close one of the trades so any slippage still applies.

monster

Assume you feel a particular ticker will be flat to the next exp date (36 days out) and it is trading at 100. You sell a 92 put for a price that is 15% of your margin requirement, and additionally you sell a call at 108 for 15% of your margin requirement. If the ticker closes between 92 and 108 you keep your premium and make 300% annualized ( 365/36*15%*2). Generally, you will make a lot more than 300% annualized since an early exit frequently yields a bigger percent of the premium than the % of time that has passed.

You realized this gain by entering a bullish and bearish option position with expirations at the same date.

You have also hedged your max loss, since one the two positions will always be a winner. Note - I normally do spreads on the bearish side, but naked puts on the bullish side.

If you want to join a team trading this system go to Trading Strategies Forum, High Probability Credit Options.

Drake

 

[Shakone]

Is anyone going to explain how paying extra to be flat is of any benefit?
Not talking about spreads, hedging or altering position size.
Its got nothing to do with strategy or timeframe.
It doesn't depend on the trader either, flat is flat fullstop.

Same size, same instrument.
Paying double to be flat.
Anyone?

Well I can give you one. I was short, my broker went down, couldn't access the platform, there was news coming, so I logged into a spreadbet account, and went long. I was both long and short at the same time. That was some benefit.

Other than that, I think people are mad to do it of course. But if this thread is anything to go by, you can't make someone see it. Psychological crutches are quite resistant to logic.

 

[Liquid validity]

Well I can give you one. I was short, my broker went down, couldn't access the platform, there was news coming, so I logged into a spreadbet account, and went long. I was both long and short at the same time. That was some benefit.

Other than that, I think people are mad to do it of course. But if this thread is anything to go by, you can't make someone see it. Psychological crutches are quite resistant to logic.

That is the only valid reason, no access to primary broker.
Purely to flatten the trade on aggregate.
Agree with the rest as well