roguetrader
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LION63 said:
Hi Lion, that is pretty much what I thought, though I must confess hadn't given much thought to how they may hedge.
As for hedge-funds I thought that was the whole idea.
Roguetrader,
The simplest way to hedge their positions is by buying put options. This helps cushion the impact of falls in the market and sometimes yields a profit in itself. As for the hedge funds we must remember that some of them are only allowed to take long positions, some bond only and others only commodities etc. The term Hedge Fund no longer means what it used to, nowadays it is used to charge extortionate management fees.
The simplest way to hedge their positions is by buying put options. This helps cushion the impact of falls in the market and sometimes yields a profit in itself. As for the hedge funds we must remember that some of them are only allowed to take long positions, some bond only and others only commodities etc. The term Hedge Fund no longer means what it used to, nowadays it is used to charge extortionate management fees.
peterpr
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The point at issue here is the COT's positions in futures and options not individual equities. I doubt you'll find a single 'Hedge Fund' among the several tens of thousands out there, that is precluded by it's 'mandate' from taking options or futures positions, either short or long. After all, there's not much point in being a hedge fund if you can't hedge now is there? Regulated funds (Unit trusts, insurance, pension etc) are another matter entirely. I used to manage a couple myself back in the eighties. Their prospectuses are very tightly drawn indeed. As a general rule their managers are restricted to carefully defined equities, funds, bonds etc and they are not involved in either futures or options.LION63 said:
They can take positions in underlying indices as well but it would depend on their existing exposure to the constituents. There would not be much point in taking a short position in the DOW if the existing exposure is only in 2 stocks. When one hears the traders in the pits talking about their clients buying puts, they are in the main referring to institutions and they often emphasise the fact that they are covering their positions.
I have never worked for a hedge fund for any other institution, the information contained in my post is what is open to the general public and I can assure all members here that not all Hedge Funds have mandates to trade equities, options or indices.
I have never worked for a hedge fund for any other institution, the information contained in my post is what is open to the general public and I can assure all members here that not all Hedge Funds have mandates to trade equities, options or indices.
roguetrader
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LION63 said:
I was aware that hedge-funds do not necessarily have to trade stocks, the fund is setup to trade whatever its foundrs want it to trade, much like normal funds, therefore it may trade equities, or it may trade commodities or it may trade bonds, or even currency, the bit that I thought was common to all hedge-funds was its ability to short. The normal funds, as I call them, whatever they may specialise in, they were not able to short
roguetrader
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Market internals closing out as they have been all day, strongly positive.
NYSE total volume more or less on par with yessterday, Nasdaq total volume about 10% higher than yesterday. As such I would say we merely have an impressive bounce today. Whether it developes into anything more remains to be seen.
NYSE total volume more or less on par with yessterday, Nasdaq total volume about 10% higher than yesterday. As such I would say we merely have an impressive bounce today. Whether it developes into anything more remains to be seen.
peterpr
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At risk of appearing a pedant:LION63 said:
1. It is not possible to trade an index. It is only possible to trade a derivative of an index.
2. If a hedge fund cannot hedge its various exposures, then it is not a hedge fund.
In any event the point of my post was that interpretation of the COT's in futures and options is not a simple matter. The 'Large speculator/trader' category is NOT always wrong; the 'small speculator/trader' is NOT the general public. etc.
I could go on but frankly I feel I'm wasting my time.
RogueTrader,
Unfortunately that is no longer the case and some funds are actually long only. Because there are so many strategies that they employ nowadays, it would not be too disadvantageous for them and they can still make a lot of money. In the main, they are just glorified institutions. Some of them only engage in takeovers or extracting value by taking aggressive stakes.
Unfortunately that is no longer the case and some funds are actually long only. Because there are so many strategies that they employ nowadays, it would not be too disadvantageous for them and they can still make a lot of money. In the main, they are just glorified institutions. Some of them only engage in takeovers or extracting value by taking aggressive stakes.
Pat494
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I hope everyone bagged some points out of yesterday's bounce. Personally I closed out too soon ( unplugged everything because of a thunder and lightning storm ), but still got 40 points.
I sometimes wonder how we fare in relation to the big institutions with employees on 6 or 7 figure salaries ? Are most of them too scared to pull the trigger on deals that may lose hundreds of millions in a day on their own judgement ? Have their analytical brains frozen solid with fear of the sack if it goes wrong ? Perhaps they have a sneaky look in to garner some ideas ? They can't really admit that some of us may be better at it than them. Less pressure and more camaraderie with the smaller guys. No doubt they will ignore such comments with a lofty disdain .....
I sometimes wonder how we fare in relation to the big institutions with employees on 6 or 7 figure salaries ? Are most of them too scared to pull the trigger on deals that may lose hundreds of millions in a day on their own judgement ? Have their analytical brains frozen solid with fear of the sack if it goes wrong ? Perhaps they have a sneaky look in to garner some ideas ? They can't really admit that some of us may be better at it than them. Less pressure and more camaraderie with the smaller guys. No doubt they will ignore such comments with a lofty disdain .....
JillyB
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Pat494 said:I hope everyone bagged some points out of yesterday's bounce. Personally I closed out too soon ( unplugged everything because of a thunder and lightning storm ), but still got 40 points.
I sometimes wonder how we fare in relation to the big institutions with employees on 6 or 7 figure salaries ? Are most of them too scared to pull the trigger on deals that may lose hundreds of millions in a day on their own judgement ? Have their analytical brains frozen solid with fear of the sack if it goes wrong ? Perhaps they have a sneaky look in to garner some ideas ? They can't really admit that some of us may be better at it than them. Less pressure and more camaraderie with the smaller guys. No doubt they will ignore such comments with a lofty disdain .....
Yep, got some points - but less than you (only 30 -but happy with this). Other commitments at work and home meant I missed all but the first couple of hours yesterday. Also it turned into a trending day, which I'm finding difficult to trade at the moment. My way of trading prefers oscillating days in consolidation ranges - such as the last few weeks and not like yesterday or Thursday, Friday last week.
However I'm in the process of looking at my system to adapt it for trending days. But basically speaking, I don't get my entry signals on a trending day, so I get stuck watching the index moving and knowing I'm missing out. I'm working on resolving this very soon.
I think we probably do a lot better than the big boys, because to us trading is a personal thing. For a lot of us it is what pays the bills, if we don't trade well, we don't get paid. The big boys still get their salary at the end of the month, whether they've hit their targets or not (they may forfit a bonus, but hey -they still have a wage). There must be a physcological effect in knowing that.
Pat494 said:I hope everyone bagged some points out of yesterday's bounce. Personally I closed out too soon ( unplugged everything because of a thunder and lightning storm ), but still got 40 points.
I sometimes wonder how we fare in relation to the big institutions with employees on 6 or 7 figure salaries ? Are most of them too scared to pull the trigger on deals that may lose hundreds of millions in a day on their own judgement ? Have their analytical brains frozen solid with fear of the sack if it goes wrong ? Perhaps they have a sneaky look in to garner some ideas ? They can't really admit that some of us may be better at it than them. Less pressure and more camaraderie with the smaller guys. No doubt they will ignore such comments with a lofty disdain .....
Program Trades are reported as over 60% of the NYSE market for week ending 17th June. It would be interesting to know how the remaining percentage is split - what percentage of trade is carried out by institutions using an analyst sitting at a desk making a decision, and what percentage is carried out be private investors ?
Do institutions employ analysts/traders to make decisions, or to write computer programs that will execute trades ?
roguetrader
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With the FOMC meeting starting today things may be somewhat subdued ahead of the result.
INDU has so far delivered an impressive bounce, volume was not strong enough to consider it any more than that. Potential resistance above sits at 10,444, 200 day sma. Potential support at the 50 day sma just below at 10,386 and of course the 10,250 area. I would suspect short sellers may add to positions on any rejection at the 200 sma.
Oil figures today will no doubt be closely watched as record prices have held centre stage in the news recently, any sudden selloff in the commodity coupled with the relative strength of the SPX and COMPQ may spook open shorts if INDU were to move above the 200 sma.
As always we shall just have to wait and see what develops
INDU has so far delivered an impressive bounce, volume was not strong enough to consider it any more than that. Potential resistance above sits at 10,444, 200 day sma. Potential support at the 50 day sma just below at 10,386 and of course the 10,250 area. I would suspect short sellers may add to positions on any rejection at the 200 sma.
Oil figures today will no doubt be closely watched as record prices have held centre stage in the news recently, any sudden selloff in the commodity coupled with the relative strength of the SPX and COMPQ may spook open shorts if INDU were to move above the 200 sma.
As always we shall just have to wait and see what develops
