# The Most Active ETFs: A Look at Their Hedging Costs

**David Pinsen submits:**The Chicago Board Options Exchange Market Volatility Index (VIX) dropped 0.94% Friday, to close at 23.16. The table below shows the costs, as of Friday's close, of hedging 18 of the 20 most actively traded ETFs against greater-than-20% declines over the next several months, using the optimal puts for that. First, a reminder about what optimal puts mean in this context, and why I've used 20% as a decline threshold.

**Optimal Puts**

Optimal puts are the ones that will give you the level of protection you want at the lowest possible cost. As University of Maine finance professor Dr. Robert Strong, CFA has noted, picking the most economical puts can be a complicated task.With Portfolio Armor (available in Seeking Alpha's Investing Tools Store, and as an Apple iOS app), you just enter the symbol of the stock or ETF you're looking to hedge, the number of shares you own,Complete Story »

- Original article
- Login to post comments

## Related

David Pinsen submits:The table below shows the costs, as of intraday Wednesday, of hedging 16 of the 20 most actively-traded American Stock Exchange names against greater-than-20% declines over the next several months, using the optimal puts for that. First, a reminder about why I've used 20% as a decline threshold, and what optimal puts mean in this context, plus a quick note about why there were no optimal puts for 4 of these ETFs. Optimal Puts

David Pinsen submits:The table below shows the costs, as of Wednesday's close, of hedging each Dow component, and the Dow-tracking ETF (DIA), against greater-than-20% declines over the next several months, using the optimal puts for that. First, a reminder about what optimal puts mean in this context, why I've used 20% as a decline threshold. Optimal Puts

David Pinsen submits:On a day when the major indexes rose, the Chicago Board Options Exchange Market Volatility Index (VIX) dropped 2.56% Monday, closing at 20.54. The table below shows the costs, as of Monday's close, of hedging each Dow component, and the Dow-tracking ETF (DIA), against greater-than-20% declines over the next several months, using the optimal puts to do so.

By David Pinsen: A drop in volatility on an up day

By David Pinsen:As stocks rallied on Thursday on news that central banks would provide European banks with unlimited dollar loans, the Chicago Board Options Exchange Market Volatility Index0 (VIX) dropped 7.6% to 31.97. That volatility index has still closed over 30 every day since August 5th. The table below shows the costs, as of Thursday's close, of hedging 8 of the 10 most actively traded ETFs against greater-than-20% declines over the next several months, using optimal puts.

David Pinsen submits:The table below shows the costs, as of Friday's close, of hedging the most actively-traded (by dollar volume) American Stock Exchange names against greater-than-20% declines over the next several months, using the optimal puts for that. First, a reminder about why I've used 20% as a decline threshold, and what optimal puts mean in this context, plus a quick note about the American Stock Exchange most actives list. Optimal Puts

By David Pinsen:Weak ISM numbers and progress toward a debt ceiling dealThe Dow closed down 0.09% Monday, as concerns about weak ISM Manufacturing Index numbers weighed on the market, despite progress toward a debt ceiling deal. The Chicago Board Options Exchange Market Volatility Index (VIX) declined 6.3%, to 23.66, on the day. Hedging the Dow

David Pinsen submits:The table below shows the costs, as of Friday's close, of hedging the most actively-traded (by dollar volume) New York Stock Exchange stocks against greater-than-20% declines over the next several months, using the optimal puts for that. Comparisons

David Pinsen submits:The table below shows the costs, as of Tuesday's close, of hedging each Dow component, and the Dow-tracking ETF (DIA), against greater-than-20% declines over the next several months, using the optimal puts to do so. First, a reminder about what optimal puts mean in this context, and why I've used 20% as a decline threshold, plus a quick note about the time frames involved here.

David Pinsen submits:The table below shows the costs, as of Thursday's close, for hedging 7 of 10 stocks that advanced on unusually heavy volume against greater-than-20% declines over the next several months using optimal puts. Comparisons