Posted by: jhamon | September 24, 2009

From MysteryHedgie: More On Copper… And Other Stuff

Sorry to all you MysteryHedgie fans: we moved offices today and so I was unable to get this posted until now.  Sorry for my tardiness. 

Take it away, MH…

To hedge or not to hedge?  Yesterday’s post-Fed reversals in stocks, the $, bonds and weakness in commodities have left many wondering if the recovery has been fully discounted.  Perhaps  you’ve hedged once or twice since the March lows; puts expiring worthless, reduced longs keep running, shorts run even harder. 

By the numbers, options aren’t cheap (see chart), the spread of implied to realized volatility is very wide as it frequently is near turning points.  We suggested yesterday that copper was once again becoming a lead barometer; below $2.66 lb. turns the picture negative; gold continues to act queasily and overowned…. Hedging has been costly since March, but if it  is part of your risk management framework, it is time to consider defense once again.  Thoughts?

Insurance Isn't Cheap Here
Insurance Isn’t Cheap Here

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