irishpaddypc
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Profitaker said:You’re introducing strategy into the debate, nothing wrong with that, but hedging doesn’t improve edge, it reduces it.
Selling calls when long the underlying is the same as selling naked puts. In the example you give above it’s the same as selling a $10 strike Put, a DOTM option. Puts and Calls are fungible.
Correct. The value of early exercise is already priced into the options and is miniscule. It’s very rare for an American to be early exercised unless there is a dividend in play – and you should be able to see it coming anyway.
"You’re introducing strategy into the debate, nothing wrong with that, but hedging doesn’t improve edge, it reduces it."
O M Goodness, Your wrong again!! HEDGING increases edge!! IT DOES NOT reduce it!. It may reduce your profits but, it gives you peace of mind and guarantees profits!! :idea: http://www.investopedia.com/articles/basics/03/080103.asp
A trader that knows how/when to HEDGE a "SHORT STRANGLE" HAS THE EDGE OVER THE BUYER!
Paddy
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