How does Thetagang hedge its portfolio?

I have tried many variations but not settled at any. Have tried adding limited short calls, PMCC structure with puts (actually put diagonal spreads), call calendars, portfolio hedge by SPX, and I guess call credit spreads.

They all work to some extent. My go to structure has been PMCC (put diagonal) and I have been able to use the long put as a hedge effectively in many many scenarios. I think it was u/raiddin1 who was discussing hedging 2-3 months back and I expanded on his thoughts (to the best of my memory) and the idea was use a hedge but when hedge makes money, cash it out don't just be holding it as is - cash out could be by closing the hedge or by just rolling it down. Since that conversation, I have been able to use the hedge profits to lower my puy strike with the most successful example being moving MRNA short from 400 to 300 by reinvesting money made by the hedge, but there i dropped the hedge altogether. In many other cases, I have moved both the strike and hedge down. This allowed me to experiment with AMZN which otherwise was beyond my portfolio size but I was sure I could manage a higher risk by an efficient hedge and I did (trade still in progress).

I have tried portfolio hedging, I think it works but did not work for me. I am building an algo based on TDA API and my rules are too rigid to account for such variations and my code delivery cycle is in weeks and months so when I found my code struggling with portfolio hedging and when I had an immediate crisis (need to adjust), I just abandoned portfolio hedging. May be some other day. But I don't see a reason why it would not work even though it may not be fine precision since your stock does not need to move in unison with SPX but still limited hedge is better than no hedge.

Basic rules are - use a long hedge, even a leap (it is a PMCC except the use of puts instead of calls) - be willing to cash out hedge - use the cash out (partially or fully) to move the theta structure ATM from ITM - plus a lot of experimentation of long strikes, long expiries, morphing structures from vertical to horizontal (of the hedges on the call side) without paying a dime but they are just ideas (tested many times but still concepts rather than mastery) and I just mention that in case you are able to execute them better than me.

/r/thetagang Thread