Hedging - Option Buying Or Option Selling?

62°
Deal Newbie
50
50
1

Did anyone here try Hedging in Option Buying and Option Selling?

If yes, which is the best thing to choose between Option Buying and Option Selling if you are someone who always hedges your position?

6 Comments  |  
6 Dimers
  • Sort By
239
1336
7

For hedging, You always buy a option and gives the premium (cost of option).

You buy PUT option when you suspect that the market will fall –
PUT – It grants the right to the owner to sell an underlying asset at a fixed price (strike rate) through a predetermined time frame

vis-a-versa for call.

OPTION seller are those who taking the gurantee to the movement of stocks. Selling do not hedge the stocks as far as i know.
@bikidas2060

338
12344
128
InvestPotato wrote:

For hedging, You always buy a option and gives the premium (cost of option).

You buy PUT option when you suspect that the market will fall –
PUT – It grants the right to the owner to sell an underlying asset at a fixed price (strike rate) through a predetermined time frame

vis-a-versa for call.

OPTION seller are those who taking the gurantee to the movement of stocks. Selling do not hedge the stocks as far as i know.
@bikidas2060

@drjpatwa @garamjalebi @BubbleBoyChickenLittle @marketdimer @Theoptionguy

338
12344
128
InvestPotato wrote:

For hedging, You always buy a option and gives the premium (cost of option).

You buy PUT option when you suspect that the market will fall –
PUT – It grants the right to the owner to sell an underlying asset at a fixed price (strike rate) through a predetermined time frame

vis-a-versa for call.

OPTION seller are those who taking the gurantee to the movement of stocks. Selling do not hedge the stocks as far as i know.
@bikidas2060

There is a scenario, you can have security backed option selling. There are different option strategies like iron butterfly, iron condor etc. But I have never done any of them so I wont know. But, people speak very high of em. 🙂

194
6342
71
InvestPotato wrote:

Selling do not hedge the stocks as far as i know.
@bikidas2060

buy put option with a higher strike price, then selling a put with a lower strike price
For eg. ITC buy 240 put and sell 200 put

Missing