OK, it's my turn to step up to the mike and face the ET audience. No tomatoes, eh?
I think that I have a fairly decent grasp of utilizing equity options on the retail level but I no experience whatsoever for hedging an appreciated equity portfolio with index options. So I'm looking for some suggestions - and nothing complicated and/or exotic like using the VIX. Maybe a little KISS for me???
My starting thought for consideration is using a 10% wide SPX collar (a short call 5% above and long put 5% below) for a modest debit. I'd determine my equity exposure and do the appropriate number of collars. If the collar got into trouble to the upside (the SPY was up 5.4% in the first quarter and 6.9% this quarter), I'd roll the entire collar up 5%, maintaining the same 5x5 pct on either side. Technically, I could sell a small portion of the portfolio to offset the upside collar loss for rolling but since I have the cash, not necessary unless the market melts up, which I doubt will happen without my having the time to adjust.
I got out of the way in 2000 and 2008 but I'd like something in place that avoids a day (or longer) like Black Monday in 1987 when I didn't know enough about getting out of the way (the 2 month 18% drop before the crash). What a nasty day! I want to stay in the game but I want to lock in years of gains. I don't have a problem with selling off a portion at an appreciated price if things get out of control but I really object to giving a large chunk back. Yep, a bit retentive here.
Any ideas how this approach (sort of a pseudo synthetic vertical) can be improved upon or perhaps some other ideas for some semblance of profit and protection? Or perhaps there was a previous convo about this on ET in the past (link?)? Constructive suggestions appreciated. TIA.
you sound like sum kid that just got out of finance school