A: It’s understandable, given the dramatic surge in the stock market valuation, that investors are looking for a means to protect themselves against a decline. An investor who feels that six months from now there will be better clarity regarding market volatility could purchase put options on the S&P Deposit Receipts (SPY), whose performance mimics the S&P 500 index. Currently, SPY trades for about $106. A March put option on SPY with a strike of 100 can be purchased for $5, effectively protecting against a decline in SPY below $95. SPY last traded below $95 on July 22.
Chris Versace is director of research at Think 20/20 LLC, an independent research and corporate access firm based in Reston. He can be reached at cversace@washingtontimes.com. At the time of publication, Mr. Versace had no positions in companies mentioned. However, positions can change.
Chris Versace, the “Thematic Investor,” is the director of research at Think 20/20, an independent equity research and corporate access firm located in the Washington, D.C. area. Before Think 20/20, Mr. Versace was the portfolio manager of Agile Capital Management (ACM), a thematically driven alternative investment fund. The groundwork for ACM was laid during Mr. Versace’s tenure as senior vice president of equity ...
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