Let’s say you have a 2M liquid portfolio and you wanted to fully hedge and insure the 2M balance using married puts or hedged puts. Let’s say you timed it well say you bought the contracts just prior to end of march and it expires around today. What would be the cost premium of these expired options?
I am an amateur to options so I never did this. Instead I fumbled with a little haphazard reallocation and sells and buys causing me to underperform S&P in last month.
I want to get a general ball park figure of what a properly well timed hedge put would cost that would fully insure a balance of 2M? And I assume the hedge put could have at one point even been profitable if sold at the dip and proceeds used to buy back etc but I want to cover just the base case of insurance from mid march to today.
Excuse any ignorance I may have on option mechanics.
Posted by timmyd79
1 Comment
Excellent question protecting a $2M liquid portfolio with married puts (long stock + long protective puts) is one of the cleanest ways to fully insure the balance while retaining upside participation