hedging against fall in dollar..

[fildi101]

I'm a UK trader, trading mainly US stocks, and some options.

since my trading is in dollars, I;'m looking for ideas as to the best way to hedge against a falling USD vs GBP

at the moment I'm just taking care that most of my cash holdings are in sterling. I've thought about using options, but I've not yet come up with a really satisfactory solution.

What do you guys do?

 

[Jack o'Clubs]

I've a large US holding which for reasons too dull to go into I can't sell until later in the year. I hedged my $ exposure simply through a forex account with CMC and buying spot GBPUSD of the same quantity as the underlying holding. Since forex is heavly margined (1% in this case), I didn't have to put much money up front. I could have spreadbet to the same effect, but if the hedge worked against me I wanted to able to put the loss against the capital gain on the stock.

 

[Rhody Trader]

Hedging through spot or futures fx is the most straightforward solution. The only issue may be matching up your exposure given fixed lot/contract sizes (unless you use Oanda).

 

[fildi101]

cheers rhody.. I guess that would be the best way to go.. I suppose I dilema is that since my holding vary so much matching the exposure is the issue. I want ot make sure I'm hedging, rather than speculating..(though some would say there's no difference) and I don't want to disort my trading results ideally..

I guess I'll need to come up with a formala based on my holdings at a given time.. maybe an hour after market open when 80% of my trades for the day have executed... so i suppose it's a case of shorting dollar, an equivalent amount to my holdings.. or just my long holdings? or my longs minus my shorts? hmmm....