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anyone buy repeating insurance (put options) along with index funds / futures ?
by naveen99 7y ago
anyone buy repeating insurance (put options) along with index funds / futures ?
- ackbar03 7y agoFor what purpose?
- naveen99 7y agoDownside protection for when market is near all time high and or trade war posturing going on...
- ackbar03 7y agoKnock yourself out, but as a sell side options trader I can tell you whitepoplar is right, payoffs not great if your doing it purely as a hedge. It makes more sense if you have a specific view on vols, in which case you don't really want to be buying them repeatedly, a few tenors at most, but really your prob better off just reducing your exposure. And selling otm to finance just makes things worse, it's something a bank would tell you to do to make more commissions from you
- naveen99 7y agoATM finance otm, not the other way around... you are short volatility usually.
- whitepoplar 7y agoTail hedging seems great in theory and I know that several professional investors do it (Universa, Nassim Taleb, etc), but I'm not sure how they make it work. S&P500 out-of-money puts are expensive and it just seems that years or decades of put losses leading up to the "big event" could run you dry.