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Options for Volatile Markets: Managing Volatility and Protecting Against Catastrophic Risk, Second Edition by Lawrence G. McMillan, Richard Lehman

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CHAPTER 7

Advanced Hedging Strategies

This chapter discusses follow-up actions that stem from basic put hedging and identifies strategies that combine call writing with put buying to take advantage of the strengths of both techniques. In addition, we discuss the notion of using combined put-call strategies as a portfolio management approach for continuously managing volatility and reducing downside risk.

Put Hedge Follow-Ups

Until now, we've evaluated put hedging from the simple perspective of what happens at expiration. But, as with other option strategies, a lot can happen in the interim. While you are not obligated to do anything prior to the expiration of your put hedge, the chances are good that you will want to, as follow-up action is frequently ...

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