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It's simple. But it's expensive and it's not necessarily foolproof in a serious crash.
by mcnamaratw 6y ago
It's simple. But it's expensive and it's not necessarily foolproof in a serious crash.
- hardwaresofton 6y agoAgreed -- I did not mean to imply that it wasn't expensive -- but what you do is bake this into the positions. Entering a position without a hedge is dangerous, though of course equities are much less likely to have drastic drops (depending on the company). Hedging is still a good idea for the usual investor -- but obviously don't take losses on puts for years trying to time a downturn. One thing I didn't note is the difficulty in timing -- if you held your puts too long, they would have gone back to zero with the insane rally we saw last month, for many reasons.