2007-05-27 19:37:54 · 4 answers · asked by albert d 1 in Business & Finance ➔ Investing
There's a couple of ways. However, the most common way is when people buy some out of the money puts.
These "protective" puts will hedge a portfolio limiting your downside risk.
Hope that helps!
2007-05-27 19:47:58 · answer #1 · answered by Yada Yada Yada 7 · 1⤊ 0⤋
Ok - very simply -- if you buy XYZ shares expecting them to increase in value you can buy (or sell - numerous strategies) options that will increase in value as your shares decrease in value... offsetting your loss... hence providing insurance
2007-05-28 03:00:30 · answer #2 · answered by Anonymous · 0⤊ 0⤋
What you are looking for is a "covered call". You can write a call to protect your existing protfolio. It is also a great strategy generate cashflow.
Just search for "covered calls" with your favourite search engine.
2007-05-28 03:56:55 · answer #3 · answered by KR 2 · 0⤊ 0⤋
Go to google and type in covered calls, and you'll get tons of content about it :)
2007-05-28 04:43:15 · answer #4 · answered by Anonymous · 0⤊ 0⤋