financeinfo

Hi guys, the normal investors who are not willing to take a high magnitude of risk and make a meaningful  diversification to diversify their risk, should take an adequate insurance. The basic character or importance of insurance is to protect its buyer’s interest  from a specific type of loss occuring by a specific event. But unfortunately there is no such type of portfolio insurances policy available from insurance companies to protect investors from market risk. But thanks to stock options, as they accomplish the same work as a insurance policy does. Actually portfolio insurance is meaningful in the last leg of bull market, when it is actually difficult to predict the market movement. Portfolio insurance provide capital preservation which is the main concern of investor. Specifically put option on a stock provides this protection. Every investor can purchase put option by paying a margin.

Trackback URI | Comments RSS