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WDIS: Back to Cool

Cutting Risk, Increasing Duration

WDIS: Back to Cool

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

With a whippy market, Tony and Katie take a look at her losing positions to determine whether or not to adjust or underhedge her directional risk. In TLT, Tony makes the argument that it may be prudent to roll her far OTM Put closer to the money. However, Katie is apprehensive as she is only down just slightly in the position. In QQQ, however, Katie agrees with Tony that something must be done to hedge her short delta, and by rolling some straddles and buying some wings in October, Katie cuts her directional risk and increases her duration.

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