equity hedge position sizing?

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equity hedge position sizing?

Postby deltaskelta » Fri Aug 03, 2012 11:47 pm

I had a successful trade that involved a put option on VZ stock that is still running from a few days ago, and I had question relating to hedging, which I just realized was important today.

1. The DOW was up 250 points.
2. My VZ trade was down, but obviously I didn't realize as much as I should because the market was up so high.

I was thinking about hedging, and to get the full effect I think I should long something like the SPY in order to get the full "relative to the market" effect of what VZ actually did.

The problem I run into is figuring out the proper position size to put on in SPY, because they are trading at different prices. I think the calculation will require a few different variables, and was wondering if anyone here knew how to do this, or knows where I should look for resources?


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