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Insuring Portfolio with Put Options or VIX Call Options? | PowerOptions Web Log
Insuring Investments Investors often have insurance for their house, car, life and business, but many don’t have insurance for their stock investments and that is a real shame. One way to insure stock investments is by purchasing put options. An investor can insure an individual stock or a portfolio of stocks using put options. In the blog article, “Individual Insurance or Group Insurance Better?”, we examined the relative costs and trade-offs for insuring each individual stock versus insuring a portfolio of stocks using index put options. The basic gist of the article is that it costs less to insure a diversified portfolio of stocks with index put options than it costs to insure each position individually. Insurance With VIX Options It is also possible to insure a diversified portfolio of stocks with the Chicago Board Options Exchange Volatility Index ($VIX) call options. The VIX is a weighted blend of prices...