Active Risk Management by Richard Gard
ARTICLE SYNOPSIS ...Active Risk Management
by Richard Gard
The options market is often thought of as a simple directional play: Buy a call option if you're bullish or
buy a put option if you're bearish. But options can also be used to manage a position. Here's a real-life
example of a trade that started as a simple long future position, became a synthetic call option, mutated
to a long derivative strangle and (finally!) ended up as a dynamic put ratio backspread.
Often, traders using trend-following systems with passive risk management face day-to-day changes in
the markets' direction that can challenge the dis...