The Traderszone Network

Published in TZ Latest News 29 August, 2017 by The TZ Newswire Staff

hedging a portfolio against a black swan

Hi,

Quick question: imagine you would want to hedge a portfolio, with lots of well-diversified positions consisting of stocks and derivatives, against a “black swan” type of event. The portfolio currently generates some positive returns if the underlying stocks (market in general) goes down 10-20%, but from 25-30% downwards it pretty much turns ugly quite fast.

How do you protect yourself against that? Obviously, by just buying puts on, say, SPY, you’d likely over-pay for insurance as you…

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