What is your favourite position?
Folks, looking for some hands-on insights.
When you are going to take a speculative position with an equity index as underlying...
I always have these questions in mind:
1) future or option
2) 1m , 2m or 3m maturity
3) out of the money is always preferred....but how far from spot
Thank you for your time in advance.
/HH
When I read the title of this thread I was thinking something completely different....
Imo futures are best because they don't require time. Reason why this is best is if you are wrong. I sell at 1460 SPX, tomorrow price is back to 1460. Option lost money, future I have not and if my view changed I can exit. Argument can be made that option you always have and no inherit risk, future you can lose it all and more. My point being buying puts in March 2010 and short future in March 2010. Likely margined out before top in late April 2010, while puts would have been ITM in May 2010.
Granted this is all part of what stage you are playing move also and how much capital. To me iti s more circumstance than rule. Also risk you want to take etc. Futures I would be more comfortable for larger position, option not so much.
Yeah this is my intention in the first place :)
Thank you for your insights, Bearearns. I know there is no right or wrong answer to this question.
Yeh future contract is good that you dont have to pay the premium, but the problem to trade future is that one (myself) would monitor closely on mark-to-market NAV.... this made me trade in/out too often ...triggered by some techinical indicators .... (I guess 2012 is a terrible year for chartist)
In terms of 1m future, I personally prefer 2m/3m to 1m future, cuz I gotta grasp extra points if the future curve shift/twist....( e.g. If i want to long... future curve -> backwardation with steep slope... will go for longer maturity...but not too long)
hahaha
Long straddle
Thank you for your reply, Boreed.
Long straddle - it is also what came across my mind... Alternatively, if the underlying is equity index, you could trade the future contract on volatility index.....option on volatility index....so how do you make the judgement?...
Cheers HH
I have more exotic tastes, especially with vanilla underlyings. Charm opens up a lot of doors in this life if you're willing to look at some non-traditional colors as well. Just don't get long the risk reversal, that can be dangerous if you're dealing with high speed.
I'm too bored to keep doing this.
Doggy-style, scream mask on.
A straddle with a strangle
But I need an authoritative voice , no squeaky Banker chick voices. I'm not going to be dominated by minnie mouse
Thank you for message, GS.
As for strangle, practically, how would you determine two strike price in general?
Cheers HH
HBS style
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