Hi Gents
A bit more here on my
Potential option strategy to protect a share portfolio.
Thanks again to Orwell and CG for responses (nice to think someone reads my stuff!)
So following advice, I have been considering the "option" of using index options to hedge a share portfolio.
BACKGROUND: I, for one do not believe in having "too many" shares. After many years I believe that about 10 is as many as you should have in a "core portfolio".
If one gets expensive/overpriced sell it and replace with one of better value. If you find that you have greater than 15 then I suggest you just buy a number of LIC’s like Argo (I still argue Argo is the most “honest” company that I have invested in; the CEO earns a very modest salary, they have outperformed the index returns for years and they really do act in the interests of their shareholders IMHO).
So, how is this relevant? If you only have a limited number of shares in a portfolio as I suggest then I have been concerned that trying to use an index to hedge could spell disaster (eg. The share/s may tank much more than any index move!) so I have been playing this over in my mind …. To the charts …
(ps I am using a time frame in the analysis below based on the maximum data that was available for IG options)
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As always welcome any feedback, comments or queries.
Cheers g
(20min delay)
