The parameters of the spread indicate that the investor is looking for downside protection through expiration in July.
So why would you ever make a trade that has limited upside and limited downside protection?
But there is a price for that downside protection: underperformance when markets rise sharply.
Put sellers may be ditching downside protection, or selling the contracts outright to pocket available premium.
There are several ways to secure downside protection, and conventional wisdom prescribes the use hedge funds.
However, few hedge funds in the world can guarantee a specific amount of downside protection.
Sellers of the put options may be ditching downside protection or initiating bullish stances on the stock.
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Third Rail Strategy provides downside protection against steep market losses, while still maintaining exposure to moderate market returns.
As you can see, even actions intended to provide downside protection to your portfolio are not without risk.
The low expectations in the stock prices of these stocks provide investors attractive downside protection and upside potential.
You're saying that this mixture of upside potential and downside protection was that the investors needed in the mid-Eightiess.
Downside Protection is also an essential element in the construction of a portfolio designed to withstand Black Swan events.
Options players cheered HSBC today by ditching downside protection, selling puts and engaging in light call buying in the front month.
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The fund was up 7.5% through the end of the third quarter and has historically demonstrated excellent downside protection during down markets.
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Finally, we need to understand how much downside protection the 10% buffer really provided considering how much of the upside was surrendered.
For two, if we ignore how very informative short interest is when it comes to share prices, investors ultimately want downside protection.
In short, the deal provides significant upside as well as downside protection.
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Variations of this strategy offer more upside by surrendering more downside protection.
Once again, short-sellers are ultimately buyers, meaning they are downside protection personified.
These Drexel issues offered some downside protection, since they were mostly debt, but had upside potential as well because there were warrants attached.
Investors chomping at the bit for downside protection are snapping up puts that could have been purchased yesterday for a fraction of the present cost.
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After the Greek election, the risk premiums for downside protection have gone from overpriced to very cheap, and we think the risks have gone up.
Fund managers and strategists said the low Vix reflects the fact that central banks are seen as backstopping financial markets, lessening demand for downside protection.
Today, premium required to buy downside protection is substantially higher.
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It is not enough that a manager made money when the market was shooting upward, investors, including the most aggressive, assume that professional management will provide them downside protection.
Namely, diversification, liquidity, transparency, low fees, and downside protection.
As with insurance products found anywhere in the world, insurance policies in China provide an element of a safety net, offering a measure of downside protection upon the occurrence of certain events.
Additionally, for growth-oriented investors, fixed-income securities can provide investors with downside protection and diversification within a growth portfolio especially in a highly volatile market where additional, measured, short-term flights to quality are likely.
Richard expects autos to do well over the next two years, so he says you are likely to get a better return than GM shareholders along with downside protection if the stock declines.
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The combination of long stock and debit put spread positions the trader to make money on the upside if shares in Cree continue to rally, while also providing downside protection in the event of a pullback through February expiration.
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