Many people are mistaken hedge for "premium is too expensive". However, most people who think this way have not spent the time to develop their own investment strategy. Consider these:
1: When you hedge, you dont just hedge because price is high, you hedge because there are enough evidence of FA and TA that could suggest a potential major trend reversal. An example of this is that I put in the hedge right before election instead of selling shares. While I believe Trump will win, but I can't ignore the potential big down turn if he loses.
2: When you hedge, you dont need to be correct every single time. It is completely normal to lose your entire position of hedge. However, even if you are just 50-50 correct on your hedge, on the time when you are right, you are likely to make up the premium on the hedge that you do lose.
3: Even if you are only 30-70 correct on the hedge, one should not ignore the emotional factor. To put it simply, having the proper hedge in place "greatly" improve your confidence to hold the stock. You are less likely to sell a stock just because it goes higher, nor are you likely in a panic mode when stock crash.
The specific way to hedge depends on personal taste and risk tolerance. The issue with this forum, as I have always said, is that people spend days and nights talking about theory, but I have rarely seen people devote their time to create their own trading and investment strategy.
还能疯狂6个月或1年
正如股市涨不会一根线一直涨上去一样，股市大跌也是有起伏的。你看历史所有大熊市都有一个或几个死猫跳的逃生机会。
真正陷在里面的大部分都是因为greed。比如说你炒股从3米炒到5米。大熊市来了，第一波掉到4.2米，然后死猫跳回到4.5米。这时舍不得离场，结果最后掉到2米恐慌出局。
Many people are mistaken hedge for "premium is too expensive". However, most people who think this way have not spent the time to develop their own investment strategy. Consider these:
1: When you hedge, you dont just hedge because price is high, you hedge because there are enough evidence of FA and TA that could suggest a potential major trend reversal. An example of this is that I put in the hedge right before election instead of selling shares. While I believe Trump will win, but I can't ignore the potential big down turn if he loses.
2: When you hedge, you dont need to be correct every single time. It is completely normal to lose your entire position of hedge. However, even if you are just 50-50 correct on your hedge, on the time when you are right, you are likely to make up the premium on the hedge that you do lose.
3: Even if you are only 30-70 correct on the hedge, one should not ignore the emotional factor. To put it simply, having the proper hedge in place "greatly" improve your confidence to hold the stock. You are less likely to sell a stock just because it goes higher, nor are you likely in a panic mode when stock crash.
The specific way to hedge depends on personal taste and risk tolerance. The issue with this forum, as I have always said, is that people spend days and nights talking about theory, but I have rarely seen people devote their time to create their own trading and investment strategy.
1: Buying put directly
2: Buying put spread and continue to roll
3: Buying reverse index
4: Buy VIX index
6: Even rotate porfolio among different asset category is a "soft" way of hedging.
It depends on your specific portfolio mix and risk tolarence.