Please explain how to use options / shorts / hedgesHi all
I have seen Travis’ recent post on – the trade note on hedging. I have been an irregular since April 2023 but do not post much. I follow the forum and Travis’ tips as well as use my motley fool subscription to review my holdings.
Today has been a bit of a miserable day. Following Travis’ message today on hedging, I was wondering if Travis or other members could explain how options / shorts / hedges are used and what sites can be used to leverage (particularly from a UK perspective as I am based in the UK). I would like to grow my understanding instead of just purchasing and selling my stocks, with the intention of improving my strategy and decision making, and would appreciate guidance on these topics.
Best wishes
Alex
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Hi Alex,
Hedging is expensive, usually, and is a drag on most portfolios, so I always like to start out with that warning — historically, if you’re patient and can avoid panicking during periodic downturns, you’re better off just riding the market and not hedging… but it can provide a valuable psychological reassurance which allows you to avoid selling your stocks on a bad day, which is partly why I lean on a bit of hedging.
I explained the mechanics of some basic hedges here: https://www.stockgumshoe.com/2023/07/monday-file-a-trade-note-about-hedging/