3 Steps for Using Options to Protect Your Portfolio

3 Steps for Using Options to Protect Your Portfolio

Posted On June 21, 2019 1:49 pm

With the stock market having a sizzling run to new all-time highs, investors are rightfully asking how they can protect their gains while still retaining upside exposure.

This is where options trading can be extremely helpful.  The most straight forward and simplest form of hedging or limiting downside risk is buying put options.  

While it is essentially true that ‘put protection’, as measured by the VIX or volatility index, is now less expensive on a relative basis than it was in past years. It can still prove quite costly on an absolute basis in terms of the drag on your returns.  

Two of the mistakes investors make in using puts for hedging protection are… Continue reading at StockNews.com

About author

Steve Smith

Steve Smith have been involved in all facets of the investment industry in a variety of roles ranging from speculator, educator, manager and advisor. This has taken him from the trading floors of Chicago to hedge funds on Wall Street to the world online. From 1987 to 1996, he served as a market maker at the Chicago Board of Options Exchange (CBOE) and Chicago Board of Trade (CBOT). From 1997 to 2007, he was a Senior Columnist and Managing Editor for TheStreet.com, handling their Option Alert and Short Report newsletters. The Option Alert was awarded the MIN “best business newsletter” in 2006. From 2009 to 2013, Smith was a Senior Columnist and Managing Editor for Minyanville’s OptionSmith newsletter, as well as a Risk Manager Consultant for New Vernon Capital LLC. Smith acted as an advisor to build models and option strategies to reduce portfolio exposure and enhance returns for the four main funds. Since 2015, he has worked for Adam Mesh Trading Group. There, he has managed Options360 and Earning 360, been co-leader of Option Academy, and contributed to The Option Specialist website.