Free Online Trading Lessons Archives

A refresher on stock portfolio hedging with futures and options

Risk reversals might be a good way to hedge price risk in a stock portfolio. 

Buying put options on stock index futures is one way to hedge portfolio risk but it isn't the only way. In fact, there are less used strategies that might offer more practical solutions such as selling call options to pay for any put protection purchased. Of course, such practices don't make sense in all circumstances.



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