Free Online Trading Lessons Archives
Learn how to hedge your stock portfolio with futures and options
Learn how to protect your investment portfolio with a combination of E-mini S&P futures and options
The futures markets were originally created to enable farmers and ranchers to hedge their business activities. Further, stock index futures were created to offer portfolio managers an efficient means of hedging; yet, most market participants are purely speculating. Join us as we go back to the basics by looking at the E-mini S&P 500 as a vehicle for hedging rather than speculating.
It is possible to construct a portfolio hedge that involves very little out of pocket expense using a combination of long put options and short call options.
Topics discussed includes:
* What is a portfolio hedge and why it can be beneficial?
* When should a portfolio hedge be used?
* What are the various methods of hedging?
* What are the advantages and disadvantages of the various methods of hedging a stock portfolio?
* Pure hedge vs. partial hedge
* The opportunity costs of hedging your stock portfolio with futures and options on futures.