Let’s say I currently own 100 SPY shares, but my absurd thesis is that the market won’t keep increasing 27% annually forever.
I’m interested in using the ZEBRA strategy to essentially replace the 100 shares with less capital and limited downside. This hedges my position and I’ll have extra cash on the sidelines if there is ever a bear market again in US history.
Does anyone have experience doing this? What are the downsides?
Posted by Hashtag_reddit
3 Comments
> This hedges my position and I’ll have extra cash on the sidelines if there is ever a bear market again in US history.
I assume there was an implied /s at the end there.
Ask the author mention, If NVDA falls, the spread loses value at a faster rate than the deep-the-money call.
Another advantage of this spread is that your long delta is going to increase as NVDA rises. If so inclined, you could roll the long call, and/or the spread up, booking some profits. This will reduce your long delta a bit but it’s AFAIC, I’d rather have a bird in the hand and less risk.
What does /S refer to?
Why not sell 10 SPX ITM calls? You’ll hedge how much deltas you chose based on the call strike, for what period you chose based on DTE and you’ll get a premium out of it equivalent to the deltas you “hedge” + some extrinsic value if you don’t go too deep ITM.
SPX being european will not get you any pin risk.