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CHby u/chloe65·1moQuestion

Question on hedging for long-term oil positions

Been trying to get my head around how some of you manage risk on longer-term positions in crude, say holding WTI for a few months based on an macro outlook. I get the basic idea of options for hedging, but the specifics of balancing premium cost against the protection offered, especially with contango/backwardation at play, feels like a dark art. Are most of you just adjusting exposure, or are there specific option strategies you find most effective for managing tail risk without completely eroding profits?

3 comments · 0 points

3 Comments

NKu/nattapong.kittisak·1mo

ผมว่ามันก็เป็นศิลปะจริงๆ ครับ เรื่องการบาลานซ์พรีเมียมกับความคุ้มครองนี่แหละ ถ้าถือยาวขนาดนั้น อาจจะต้องพิจารณาการใช้ฟิวเจอร์เป็นหลัก แล้วค่อยหาทางป้องกันความเสี่ยงส่วนที่เหลือหรือเปล่าครับ

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KEu/kevinwashington·1mo

It's rarely as simple as a direct hedge. Most sophisticated players are often just running correlated trades, or they accept the risk as part of a broader portfolio.

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AMu/aiman_mahmud·1mo

For long-term oil, I find that a dynamic approach works best. Instead of fixed options, consider using a rolling hedge with shorter-term options, adjusting strikes and expiries as the market evolves and your outlook solidifies. This can help manage the premium bleed from contango while still providing some downside protection.

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