HYG Puts as left-tail risk hedge?
Thoughts on HYG puts? Any better ideas for left-tail risk hedging?
Seems like half of the wall-street trading deks are loading up on this.
Thoughts on HYG puts? Any better ideas for left-tail risk hedging?
Seems like half of the wall-street trading deks are loading up on this.
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Hi Achilles., whoops, looks like nobody chimed in here.... maybe one of these discussions below is relevant:
More suggestions...
If those topics were completely useless, don't blame me, blame my programmers...
Depends what you are trying to hedge. Your PA? Better to not take basis risk on. If you are a HY HF much better to buy swaps or HY CDX shorts. Want to hedge rates? Hedge dv01 or partial durations. Sell side desks don't hedge with HYG because of the basis risk, they just hedge with CDX. Also buying HYG puts is as much a vol bet as a directional one. Whoever is buying HYG puts may be doing so for numerous reasons.
Can you ELI5 the basis risk with HYG? And “whoever is buying HYG puts may be doing so for numerous reasons”, can you expand on those reasons?
Where does it say 1/2 of the wall street desks are loading up on the trade?
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