An asset management technique designed to provide a portfolio with a lower limit on value while permitting it to benefit from rising security prices. The basic concept involves the purchase of a "protective put" on the portfolio, with the balance of the funds invested in the underlying assets.
An option hedging strategy to protect long cash market positions. A method of hedging a portfolio of stocks against the market risk by short selling stock index futures short. Institutional investors frequently use the hedging technique when the market direction is uncertain or volatile.
In order to protect a portfolio of stocks an investor may sell index futures or buy index put options for downside protection.
A strategy using a leveraged portfolio in the underlying stock to create a synthetic put option. The strategy's goal is to ensure that the value of the portfolio does not fall below a certain level.
A method of hedging, or protecting, the value of a stock portfolio by selling stock-index futures contracts when the stock market declines. The practice was a major contributor to the October 1987 stock market crash.
A return based on the performance of an active trading strategy that allocates funds dynamically been the underlying assets and a lower risk asset such as cash or bonds.
A trading strategy that uses stock index futures and/or stock index options to protect stock portfolios against market declines.
(go to top) A risk-hedging strategy involving the use of stock-index futures.
A trading strategy which attempts to alter the nature of price changes in a portfolio to substantially reduce the likelihood of returns below some predetermined level for an established period of time. This can be achieved by moving assets among stocks, cash and fixed-income securities or, with the advent of stock index futures contracts, by hedging a stock-only portfolio by selling stock index futures in a declining market or purchasing futures in a rising market. The objective is to create an exposure similar to that of a stock portfolio with a protective purchased put option.