Pairs Hedging

With pairs hedging, you can make adjustments by using similar or correlated underlying positions to hedge other positions in the same sector or industry.
Pairs Hedging
Kirk Du Plessis
Apr 19, 2021

You've likely heard of the concept of "Pairs Trading" but in this video tutorial I want to talk about "Pairs Hedging". I will often use similar or correlated underlying positions to hedge other positions in the same sector or industry. For example I could use RIG to hedge USO or GLD to hedge GDX or FB to hedge TWTR. The benefit of doing this is that I am sometimes able to get much better options pricing by using a corresponding ticker in the same industry versus making an adjustment to my current position that may or may not have favorable pricing at the time.

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