Buy insurance at 860 Call strike price for between .70 to 80 cents. For the smaller portfolio (15 contracts) size buy just one contract . Total cost of between $70 to $80.
For larger portfolio buy 5 contracts.
Rule buy 1 contract for every 10 contracts you have.
For larger portfolio buy 5 contracts.
Rule buy 1 contract for every 10 contracts you have.
With the RUT down nearly 3.5% since the iron condor trade, should we not be buying insurance on the downside (puts) rather than the calls? TIA
ReplyDeletemehboob-
ReplyDeleteVolatility is pretty high at this point and our short delta even with a 3.5% down move is at .14, which is till manageable for us. Mind you the high volatility makes the Put insurance very expensive at this point. That is not to say we would not buy it if we have to, but at this point we think we can manage the risk.
We put out the alert for the Call insurance because at this point that is very cheap, if the market were to reverse to the upside during the next few weeks you would begin to see the strategic significance of buying insurance when it is cheap.
thank you ko
ReplyDelete