Hubert Senters here.
Let’s walk through an example of a few ways or I still say a couple of ways. I’ll do one way today and one way tomorrow on a video on how to hedge in a position. And all hedge is really some you’re in a trade and something’s going wrong. And it has to be — it’s not a catastrophe or anything.
It’s just something is not going in your direction. So let’s walk to an example really quick. All right. So in this real world example I am short the 10 year contract, the 10 year note on Treasury notes. It’s the bonds and the note dropped 10 year. So I’m short and I’m taking this little heater here a little bit of a bounce. So there’s a couple things I can do.
So number one I don’t want to get out of position and I don’t want to choke. I don’t want to ratchet down the stop-loss so close that it chokes me on the position and I have to jump out of it because I’ve got a couple more weeks that I can stay in this position anywhere from two to four weeks.
The first thing I can do is act and trade a different contract month in the opposite direction. So let me show you what I’m talking about. So in that case scenario since I’m talking about futures in this example you can see I’m short. The 10 year and on Friday, let me see if I can — I’m trying to be – it’s completely transparent here as I can with you.
On Friday, I was on this trade at $23.59 and it aid into it. Now, I’m only up $18.43 so how can I offset that? Well, a couple of things I can do is I’m coming over here to my matrix and go okay. I know I’m in the TYM18. This contract right here in the June contract where I can do is I can go down here to the TYU18, the September contract.
And since it’s active I can go ahead and get long that contract. So basically, I would be short the 10 year in June but I’ll be long the September. And I wouldn’t want to be in the September trade for long maybe anywhere from three to five days and then the 10 year rolls back over and then I jump out of that long.
So this is kind of what that looks like. So I’ll go back to the chart. So all I’ve done here is up the two charts side by side. So the TYM18. Okay. And then I’ve got the TYU18 and all you need to know here is this is the June right here. This is the June contract and this is the September contract and this is going to be active for.
I’ll wait until the second Tuesday in June. Okay. Now, I’m short this thing so I want this thing to continue going lower. Oh, it’s no longer going lower. It’s actually bouncing up against me and taking some of my PNL away from me. I don’t like that. So what I can do as soon as I see that amounts. This is a daily I would look at it on a 60 minute but I would just copy and paste the chart and change the symbol.
Now, they look identical up because they’re basically all except for the contract. What I can do instead of jumping out of this one I’m going to stay short over here and then simultaneously I’m going to get long this bad boy over here and they’ll cancel each other out. And then when this one gets up here and then starts running out of gas and rolling over then I’ll just exit this one and I’ll stay in this one as it goes over. And that is one way that you can efficiently hedge your position in bonds and in different contract months.
I’m going to be doing a special webinar on ‘’How I made $6,281.25 in 10 days’’ actually it was more than. I think is like $7200 but risking only $312.50 showing you doing the stuff that I just kind of explained on the video before that Wednesday, May 23rd, 8PM EST.
Heads up, GotoWebinar only holds 1,000 people. It’ll probably max out so you want to try to log in early.
Good luck. Hope it helps and I’ll see you on the next video.
Hubert.
