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Rethinking Holte Ca pi ta l 22 9
the resulting portfolio would be a lower correlation combination of
securities with a better risk/return profile. While a valid idea, in reality
this purchase of downside protection is impractical for most investors.
First and foremost, many investors are not set up to trade options
and are generally inclined to stay away from the space of derivative
trading (a healthy trait indeed). Second, consistently buying out-of-
the-money puts in a high volatility environment can be prohibitively
expensive, particularly when you include the large bid/offer spreads
and commissions charged. A s