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re: Paging IG or any other big money guys
Posted on 7/14/16 at 4:16 pm to b-rab2
Posted on 7/14/16 at 4:16 pm to b-rab2
Curious, how much insurance is it buying? What I'm asking, is what methodology do you use to try to figure out relationship between market drop, VIX increase, and subsequent gain used to offset overall market loss.
My best guess is an average portfolio constructed like the S&P is 10 VIX calls for every 10% drop in a $100K portfolio.
I buy to insure 25% of my portfolio for a 25% drop, but I don't use 10 calls for 10%. Because I own some very stable companies, MMM, X, AA as examples, and I'm not worried about these long term. I also am slightly overweight in oil, so I've started to buy oil VIX, which is OVX. But I also buy out of the money to attempt to control the premium expenditure.
My best guess is an average portfolio constructed like the S&P is 10 VIX calls for every 10% drop in a $100K portfolio.
I buy to insure 25% of my portfolio for a 25% drop, but I don't use 10 calls for 10%. Because I own some very stable companies, MMM, X, AA as examples, and I'm not worried about these long term. I also am slightly overweight in oil, so I've started to buy oil VIX, which is OVX. But I also buy out of the money to attempt to control the premium expenditure.
1
Posted on 7/15/16 at 9:35 am to Iowa Golfer
quote:
What I'm asking, is what methodology do you use to try to figure out relationship between market drop, VIX increase, and subsequent gain used to offset overall market loss.
Never thought about it this way.. I guess I'm just a simpleton. $1250 is what the trade cost which right now keeps me with a little cash on the sidelines. I didnt want to be empty on cash incase I find something I like during this bullish move.
IYO, should a person be buying insurance 6 months out or is 2 months enough? I guess I'll live and learn next time.
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