Exchange-traded funds (ETFs) provide investors with a great way to invest like the professionals in everything from the obvious to the obscure. Using stock options, investors can build upon these strategies and better control their risk/reward profile. In this article, we’ll take a look at how protective puts can be used to hedge a long ETF portfolio against short-term declines or help lock-in profits after an extended move higher [see 101 ETF Lessons Every Financial Advisor Should Learn]. What Is a Protective Put? Protective puts are simply long put options written against an existing long equity position. For example, suppose that you own 100 shares of the SPDR S&P 500 ETF Trust at 160.00 and are worried that the market may move lower. While you could sell the stock and buy back in later, you’re not sure that the rally is coming to an end quite yet, and buying and selling could result [...] Click here to read the original article on ETFdb.com. Related Posts: Daily ETF Roundup: Buy The Rumor, Sell The Tweet Daily ETF Roundup: OIH Jumps On Strong Earnings, TAN Soars After Acquisition Deal ETFdb Weekly Watchlist: VGK, EWJ and SPY Hinge on Eurozone Data, Policy Change and U.S. GDP Report Daily ETF Roundup: IHF And XLK Slump On Lackluster Earnings Gold Hitting Two-Year Lows: Are Glory Days Done?
Exchange-traded funds (ETFs) provide investors with a great way to invest like the professionals in everything from the obvious to the obscure. Using stock options, investors can build upon these strategies and better control their risk/reward profile. In this article, we’ll take a look at how protective puts can be used to hedge a long ETF portfolio against short-term declines or help lock-in profits after an extended move higher [see 101 ETF Lessons Every Financial Advisor Should Learn]. What Is a Protective Put? Protective puts are simply long put options written against an existing long equity position. For example, suppose that you own 100 shares of the SPDR S&P 500 ETF Trust at 160.00 and are worried that the market may move lower. While you could sell the stock and buy back in later, you’re not sure that the rally is coming to an end quite yet, and buying and selling could result [...]
Click here to read the original article on ETFdb.com.
Related Posts:
