How to properly hedge indices futures NQ by selling leveraged index options TQQQ or SQQQ?
How to properly hedge indices futures NQ by selling leveraged index options TQQQ or SQQQ?
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surewin · External communityPost link
External question — Personal Finance Stack Exchange
Author: surewin
Original post: https://money.stackexchange.com/questions/157939
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
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Is there a formal futures NQ vs TQQQ options contracts hedging ratio calculation/strategy to tap on the fast decaying value of weekly expiry TQQQ options thereby creating an asymmetric risk-reward scenario?
The goal is if you are wrong, you breakeven...but make a profit if you are right...within a week.
For e.g, If you are bullish, you long NQ futures & sell TQQQ call weekly decaying ATM options
If you are bearish, Short NQ futures & sell SQQQ call ATM weekly options
Is SQQQ options a better choice than TQQQ options to do this?
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Ryan Kephart · External communityPost link
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Author: Ryan Kephart
Original post: https://money.stackexchange.com/a/158125
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I've looked at this before. It's not perfect. There is probably an arb there. You will have to test it. There is no official formula for it. I've also looked at this with NG vs UNG, CL vs USO, etc.
Grab a TD ameritrade Think or Swim account and put the trades on in the simulation mode and see what works. You can go back in time with Think or Swim and trade a simulated account. You are going to have to play with it and test it.
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Quoted from Forex.com.bd-Editorial External question — Personal Finance Stack Exchange Author: surewin Source score (net votes, not local likes): 0 Original post: https://money.stackexchange.com/questions/157939 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Is there a formal futures NQ vs TQQQ options contracts hedging ratio calculation/strategy to tap on the fast decaying value of weekly expiry TQQQ options thereby creating an asymmetric risk-reward scenario? The goal is if you are wrong, you breakeven...but make a profit if you are right...within a week. For e.g, If you are bullish, you long NQ futures & sell TQQQ call weekly decaying ATM options If you are bearish, Short NQ futures & sell SQQQ call ATM weekly options Is SQQQ options a better choice than TQQQ options to do this?
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