>>30374865
I copied this dialogue between two anons some threads ago
>Anyone who advocates for longing SQQQ or something similar for hedging is a brainlet. Buy far OTM SPX puts dated for 2023+. 2500 strike or lower, this is what the Fedora-tipper of the trading talking heads Nassim Taleb advocates for.
>Basic problem, if that's what you even want to call it, is that it's like a once every 7 years you hit the massive payday and have to sit through mostly losing trades even though it has a massive positive EV. Most people can't comprehend it or don't have the patience
>His tail risk strategy would have still yielded you great returns literally last week, and a few weeks before that, back in September, etc. Minor corrections still greatly benefit your tail risk strategy position. The key is to wait for VIX to drop below 20 (18-20 is realistically ideal range) for you to buy SPX LEAPS puts so that you buy it when volatility is at its lowest. Then, when mini-corrections like we saw the last couple weeks arise, you benefit from vol spike which produces asymmetrical returns on your hedge positions on the SPX puts.
>As long as the strike price is 30-50% below current price? Then, correct. Tail risk investors believe that there’s a “volatility tax” that prevents you from achieving the returns associated with compounding, that is, you make 10% in year 1, 7% in year 2, but -9% in year 3 which erodes your annualized returns. By following a tail risk strat, you might do 9%, 5%, but 6% in year 3 which would mean that even though you underperformed in 2/3 years, in a bearish year you severely outperformed which pulled your annualized returns way ahead.