Hedging energy exposure with options - worth it for smaller accounts?

asked by u/santos_luciana · 8h · 2 answers

I've been watching the Nat Gas market for a bit now, specifically the $NG_F futures. Thinking about taking a small long position soon, but the volatility is wild. I've read about using options to hedge, like buying puts. For a relatively small account, is the cost of buying protective puts on a future really worth it, or does it just eat too much into potential profit? Am I better off just reducing position size and dealing with the risk directly?

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  • u/linh78· 5 pts· 6h

    That's a great question about balancing risk and cost for smaller accounts. While puts definitely offer protection, the premium can be significant, especially with high volatility. Have you looked into how the bid-ask spread on those options might impact your effective cost?

  • u/takin25395443· 1 pts· 8h

    It's always a fun calculus, isn't it? The cost of sleeping soundly versus the joy of unfettered gains. Sometimes those puts feel less like a hedge and more like a tax on optimism.

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