Comments on: Is this the best hedge in the Stock Market Casino? http://www.the-baccarat-guide.com/is-this-the-best-hedge-in-the-stock-market-casino.html Play baccarat with style Fri, 19 Feb 2010 02:58:03 +0000 hourly 1 http://wordpress.org/?v=3.1.3 By: zman492 http://www.the-baccarat-guide.com/is-this-the-best-hedge-in-the-stock-market-casino.html/comment-page-1#comment-8232 zman492 Thu, 27 Aug 2009 13:48:28 +0000 http://www.the-baccarat-guide.com/tips/baccarat-questions/is-this-the-best-hedge-in-the-stock-market-casino/#comment-8232 Probably not. A conversion, reversal, jelly roll or box spread is probably the best. If you think the implied volatility of the option is too low, yes, otherwise, no. True, but if the stock price stays fairly steady you can also convert a profit into a loss. No. At a blackjack table you can lose 100% or your original bet plus 100% of your insurance bet. With a long stock plus long put combination you cannot lose 100% of both positions. Long-term puts on volatile stocks are expensive. It will usually take a large move in the stock price to make a profit if you hold until expiration. If you want to know more about protective puts you may want to see the discussion about them at I strongly urge you to learn more about options before you try to incorporate them into your trading strategies. Option trading is at least as much about how volatile the stock price will be as it is about which direction the stock price will move. Probably not. A conversion, reversal, jelly roll or box spread is probably the best.

If you think the implied volatility of the option is too low, yes, otherwise, no.

True, but if the stock price stays fairly steady you can also convert a profit into a loss.

No. At a blackjack table you can lose 100% or your original bet plus 100% of your insurance bet. With a long stock plus long put combination you cannot lose 100% of both positions.

Long-term puts on volatile stocks are expensive. It will usually take a large move in the stock price to make a profit if you hold until expiration.

If you want to know more about protective puts you may want to see the discussion about them at

I strongly urge you to learn more about options before you try to incorporate them into your trading strategies. Option trading is at least as much about how volatile the stock price will be as it is about which direction the stock price will move.

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