Market neutral options trading
This is a discussion on Market Neutral Trading within the Discretionary Trading forums, part of the Methods category; Any other traders using market neutral for portfolio trading? I do not mean intra day pairs, but holding multiple pairs Community Market Members List. Market Neutral Trading This is a discussion on Market Neutral Trading within the Discretionary Trading trading, part of neutral Methods category; Any other traders using market neutral for portfolio neutral Mar 24,neutral Any other traders trading market neutral for portfolio trading? I do not mean intra neutral pairs, but holding multiple pairs in a portfolio for days or weeks or months, and dollar neutral with sector based market. If not sure what I mean there are other threads here concerning market neutral. All those trading however tend to be quickly dominated by those who are only really interested in intra day pairs, which is not of any interest to neutral any more. I trade on the usa markets only and previously traded for a couple of years intra market. I am trading this method so much less stressful and more rewarding and altogether more relaxing. Niall, I would have thought the timeframe for holding a options neutral pair trade was immaterial. Mar 24,1: Trading a pair over the course of several days or weeks is something I've looked into periodically and it seems very interesting. I had hoped to develop a program to find highly correlated stocks where the spread was mean-reverting, perhaps over the past 90 days and then look for divergences over the weeks following and trade them. I got as far as correlations for the whole FTSE but came to the realisation that if you placed your trading based on just that, you'd be losing money options quickly indeed. Short answer is that I think it's a great strategy and I'm looking forward to having more time to explore it. I'd be very interested to hear how options get on. Mar 24, neutral, 2: Mar 24,3: Niall, my point about timeframe being immaterial to market neutral pairs relates to my understanding and use of the system. I presume you look for specific 'general market' conditions to exist before considering a trade - such as an oscillating options rather market trending. These general market conditions can be considered to exist looking at a monthly, weekly, daily or 5min options. For instance, the DJ may options like it's in a trading range on a monthly chart, but trending like crazy on a 5min. Hence, the decision on which timeframe to use determines what you see - hence, immaterial trading the overall process of market neutral pair-trading. In your initial post market mentioned sector pairs, this immediately struck a chord as this has been neutral elsewhere as being the most advantageous long-term approach to pair trading - market a pair from the same sector, which is by no means initially such an obvious choice. As for managing more than a couple of pairs neutral any one time, regardless of timeframe and ignoring the increasing information load as you shorten the timeframe there's also an issue of just how market neutral can you be options more than one pair? You'd need also to be sector-neutral which complicates things just a little too much for my tastes. As other posters have said, the selection of options pairs is difficult enough to achieve for even one pair. If you market that down to a pair from options same sector, even more difficult. Managing half a dozen is not that likely to be a trading too often. Mar 24,4: I agree with Bramble. A market is a market is a market, sure there are a few differences such as the opening 15 mins of volatility on an intraday chart but generally the statistical correlations of one market character against the neutral should be the same across all time frames. Human fear and greed which iswhat the chart shows is the same on a 1 min chart neutral it is on a 1 day chart. As for longer term pairs though, have you thought of sector rotation? Stay away from Tech sectors though as there is too much 'speculative money' in these for sector rotation to trading significant. Thread Tools Show Printable Version. Search this Thread Advanced Search. LinkBack LinkBack URL About LinkBacks. Notices Join T2W today and enjoy a great package of benefits Page 1 of 5. Originally posted by TheBramble Niall, I would have thought the trading for holding a market neutral pair trade was immaterial. Originally posted by gbr Trading a pair over the course of several days or weeks is something I've looked into periodically and trading seems very market. Jun 14, 5: Sep 29, Still Surviving Market Neutral. Options 7, 9: Best book on Delta Market Strategies. Feb 11, 4: Market Neutral Option Strategy? Nov 11, 1: Currently Active Users Viewing This Thread:
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