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 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 »