I know that OptionVue 5 (which I use) has a tool called HedgeFinder that lets you graph a portfolio of stocks and options against an index (say the S&P 500) that tell you how much you are likely to gain/lose based on movements of the SPX. It also has a tool that will automatically recommend the best hedge based on parameters you input (how long you want to hedge for, what % drop in value are you willing to tolerate). I was even looking at an article on their educational site that talks about using options to insure a Portfolio: www.discoveroptions.com/public/cont...options/strategiesandtheuseofoptions.html#top But I notice if I run it that it seems like it is very expensive to hedge against, say, a 5% decline all the time. Other articles I have seen say the rule of thumb is that it costs 3% of a Portfolio's value to insure it. My question is if there is anyone that has ever actually tried this over the long term? If so, did you find that the cost (lower return) each year you had to accept each year the market was up was eventually made up (and hopefully more) in down years? Or are you perhaps better off trying to minimize the costs by only hedging when you feel there is a good chance the market will decline? (at the risk of not guessing correctly and having a market correction when you are not hedged). Any thoughts or experience anyone has on this would be very interesting to me.