07-27-2014, 05:13 PM | #4335 |
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07-27-2014, 05:15 PM | #4336 | |
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Or rather, you don't know how to hedge or hedge properly. Last edited by nnnnnnnnnnnnnnnnnnnnnn; 07-27-2014 at 05:25 PM.. |
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07-27-2014, 07:41 PM | #4338 | |||||
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1. People can write a(n) "lotto/AU" options, and make some small amount of income. 2. ^VIX (TVIX, VXX and variants) are freaking measurement of fear. People get confused with bear indexes. It maybe proportional, but not the same. I've seen VIX rising on a bullish days. It is like calling Linear Algebra same sh1t as College/Business Algebra. 3. I am sure F1venom knows what hedging and property of it is. He is an investor. Hedging is basically a "damping" (phys term) or scalar multiplication (in complex variables)of an function. In this case, it is for portfolio. I try not to use econ/fnce terms (although I studied it), because tons of wanna be or uneducated CFA w/3 with lack of math skills over used the terms. EX -I bought a stupid house, because I am going to hedge against rising rent. -I bought a Au, Pt, and Ag, because I want to hedge against the worthless falling currency (of your choice). -I bought/sold PUT/CALL, because I want to hedge against falling/rising. 4. IF you buy a TVIX, you are basically you are BETTING on the volatility and fear of ^GSPC risk multiple of 2x beta. True hedging against S&P500 index [fund] would be sh1t like SH, SDS,SPXS. |
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07-27-2014, 07:49 PM | #4339 |
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I will expand upon my previous example of hedging a portfolio.
In this portfolio we want to hedge against market/systematic risk. That is risk of overall markets selling off (i.e. not company specific like poor earnings being released). In this example we want to be relatively market neutral for a short period of time because we think there might be an event or catalyst that will cause the market to sell off in the next few days (like a declaration of war or some shock to the system). Let's say our portfolio is made up 20 different stocks across multiple industries. Now we could put a temporary hedge on by using SPY puts or even single stock options, but I think it'd be better to diversify AND hedge at the same time. As I mentioned before volatility is mean reverting. It has been so low for so long that the chance of a sharp spike in volatility is greater. We could use TVIX, UVXY, etc etc. So for this example let's say we buy some TVIX. Without writing an essay, let's just assume that it does in fact give you a 2x directional result (it actually doesn't for multiple reasons). So now we have a portfolio that is hedged due to our perception that there will be increased volatility in the very near future. Let's fast forward a few days. Let's say the Fed announced that they will immediately stop QE and will raise rates. Granted this is a bit extreme, but it helps explain it easier. Markets begin to sell off. Our 20 stocks are falling, but our TVIX position is flying. Our 20 stocks may lose a massive amount, but it is offset by our leveraged position in TVIX. Now let's go back and say nothing happens and our assumption was incorrect. We close out our TVIX position and gladly eat the loss. We bought a short term insurance policy against volatility and thankfully we didn't have to use it. The same could be said if the market flew higher (albeit we'd have to eat a bigger loss) but the rise in our 20 stocks helps offset our losing TVIX position. Now I made some assumptions to help prove the point, but this is essentially how someone who is buying TVIX right now may be thinking. This is also really for people who actively monitor/trade. The average investor has no business playing with leveraged ETPs. Last edited by nnnnnnnnnnnnnnnnnnnnnn; 07-27-2014 at 07:59 PM.. |
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07-27-2014, 08:00 PM | #4340 | |
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07-28-2014, 03:56 PM | #4341 |
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07-29-2014, 03:53 AM | #4342 |
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07-29-2014, 04:41 PM | #4344 | |
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07-29-2014, 06:04 PM | #4347 |
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GPRO already having an earnings? wow.
I am off on earnings estimate. Numbers I predicted fairly correct by infusing # into the balance/income, but I think investors are getting less greedy. I am predicting earnings # right, but direction of price wrong. |
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07-29-2014, 06:20 PM | #4349 | |
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If you really don't want to miss an opportunity , maybe buy 100sr or less? |
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07-29-2014, 06:23 PM | #4350 |
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Hmm, yeah thinking about adding about half of my intended position and if it drops adding more into that dip.
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07-29-2014, 06:29 PM | #4351 | |
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I am watching GPRO after some crazy IPO run. Did GPRO say they will diversify their business pipeline beyond selling camera? I would love to know. If they continue to only sell camera and supplemental services, I don't think I would be interested. I bought some (Very little srs of) Pandora today. I don't even listen to music on the phone. (Heck, I dont even Tweet, and had Twitter for 2mo). I think 27.50 would be an decent target price to exit WITHOUT any good/bad news. I still couldn't pull the trigger on AMD, but I will most likely to buy some AMD within 3-5days. El Pollo Loco is another one I am interested in. El Pollo Loco was one of my favorite chicken place in S.CA. I haven't had El Pollo Loco since 2004. |
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07-29-2014, 06:34 PM | #4352 | |
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Also, it would be interesting to see how GPRO's publicity and growth will affect AMBA which has a relationship with them. |
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07-29-2014, 06:38 PM | #4353 |
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I just really do not want to miss out on the potential upside of GPRO. Growth seems pretty good and they are getting alot more publicity (also sponsoring alot of athletes.)
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07-29-2014, 07:38 PM | #4355 |
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