24. Portfolio Puts
“I am not going to sit on my ass as the events that affect me unfold to determine the course of my life. I’m going to take a stand. I’m going to defend it. Right or wrong, I’m going to defend it.”
—Cameron Frye (played by Alan Ruck) in Ferris Bueller’s Day Off (1986)
Cameron Fyre would be a great investor. He certainly understood the risk / reward relationship being friends with Ferris Bueller. Defending against the events that can affect you is the whole reason behind hedging. As you’ll read in this chapter, portfolio level puts provide a broad-based level of protection for a portfolio.
The hedging tactics discussed so far (married puts, collars, and deep ITM calls) are all great ways to define risk and limit volatility in ...