Hedging with SPY Put Options

2 months ago

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"Now, how much does it cost to hedge? If I want to protect for a year and something more, I have to pay around 40 for a put option on the spy ETF here. So, for 13 14 months, I am 5.9%. So, I buy a put and whatever happens with the market I am at zero. Of course I hope to lose those 5.5%. Because that 6% cost allows you to be 100% long with whatever you have in your portfolio. Maximum loss is 6% - that's the maximum downside your portfolio has."

The speaker explains a hedging strategy where buying a put option on the SPY ETF for about 13-14 months costs roughly 5.5%-6% of the portfolio value, effectively limiting the downside risk to 6%. This method is presented as a cost-effective way to protect against market downturns, providing a defined loss while maintaining exposure to potential market gains.

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