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