Re: [TheOptionClub.com] Re: please educate me

 

The question does bring up a point I have occasionally wondered about.
It is, since there is no underlying you can trade, do the MMs and
others who do dynamic hedging, use an approximation like SPY to do the
hedging? I know there are some index options where there is no
approximation to the index (XAU nay be an example). What do the MMs
there use to hedge?

On Thu, 07 Jan 2010 19:33:02 -0000, <chris@theoptionclub.com> wrote:

>Do you mean to say that you are selling naked straddles on the SPX?
>
>Pardon the bluntness, but if that is the case you must be absolutely
>mad. For $66 you are in what is for all practical purposes an unlimited
>risk trade. A lot of money has been lost by folks selling naked options
>on indexes like the SPX. You are essentially acting as an insurance
>carrier for the market. One big move could wipe you out completely.
>
>Christopher Smith
>TheOptionClub.com
>
>
>--- In OptionClub@yahoogroups.com, "paul7313" <paul7313@...> wrote:
>>
>> first off the index was spx. I sold a call and a put at 1120 for $66.
>expire in feb 2010.
>>
>> Since the index is moving, is it better to buy back the position
>before expiration or let it expire on its own? What is the cutoff
>before I must worry?
>>
>

__._,_.___

Reply to sender | Reply to group

Messages in this topic (6)

Recent Activity:

• New Members 11

Visit Your Group Start a New Topic

The goal of TheOptionClub is to provide a forum for members to work together for the purpose of furthering our individual understanding option trading.  All messages and postings, and any materials circulated are provided for discussion and educational purposes only.  No statement contained in any materials from TheOptionClub should be considered a recommendation to buy or sell a security or to provide investment, legal or tax advice.  All investors are encouraged to consult a qualified professional before trading in any security.  Stock and option trading involves risk and is not suitable for most people.  There is no guarantee that any information provided is accurate and, may in fact, be wrong.  It is understood that the participants in TheOptionClub have varying backgrounds and degrees of experience in option trading, and that regardless of experience each member is considered a student.  As such, any information distributed through TheOptionClub should be considered with a critical mind and not relied upon as an authoritative source.

To unsubscribe from TheOptionClub, send an email to:
OptionClub-unsubscribe@yahoogroups.com

MARKETPLACE

Going Green: Your Yahoo! Groups resource for green living

Switch to: Text-Only, Daily Digest • Unsubscribe • Terms of Use

.

__,_._,___