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I am not advocating or suggesting anything, just stating what I am doing. My theoretical downside risk is that spy goes up 100x, my 401ks also go up 100x.
by adrr 7y ago
I am not advocating or suggesting anything, just stating what I am doing. My theoretical downside risk is that spy goes up 100x, my 401ks also go up 100x. I am trying minimize my risk at the expense I may give up some gains if there is bounce up.
Index funds aren’t necessarily safe. Nikkei index has never recovered from its 90s high. NASDAQ took 15 years to recover. Know the risks.
- wltprgm 7y agoAs somebody else has said, put options are available. You must be really confident to short at all
- pathseeker 7y agoPuts are insanely expensive now with the current IV. If you're just protecting a portfolio without selling, shorting SPY is fine if you have offsets in your stocks.
- adrr 7y agoI also have puts. The cost to get into puts it extremely expensive, I am going to have to pay 125% of my gains into premiums to get any decent downside protection for my main assets. That can easily go to 0 and came close when we had that spike on Friday. Shorting index funds is far less risky. Has any index every set off the tripwire for an upward swing? If spy wasn’t hard to borrow, Id be exclusively shorting. Want to see crazy premiums look at puts on the JNK etf.