There are other ways to hedge of course. One is by trying to diversify between asset types. But one thing I have noticed is that when things get bad, unusual things start to happen - like assets dropping in price together despite the fact that they are not usually correlated (think stocks and bonds this summer). I am not suggesting that everyone buy puts to protect your portfolio. I was just trying to bring in some hard numbers to quantify the cost of that insurance. I notice that when people talk about hedging by buying puts in the abstract, they tend to think it is a great idea. But mention reducing your possible return by 3-4% and they quickly forget about pursuing that idea. That is why few investors keep their portfolios hedged. But keep in mind that options are very flexible and there are many things you can do. You could buy much farther OTM as someone else suggested to insure against completely being wiped out. And you don't have to only buy puts. For example, you could always sell call credit spreads to help pay for the puts. That essentially puts a collar on your portfolio. The reason you would probably want to sell call credit spreads, rather just a call as you would in a typical collar, is that you do not actually have a position in the underlying. Since you are hedging a long stock portfolio that contains a number of assets, the credit spread has a smaller capital requirement than selling naked calls in the index would have.