Value Investing Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Value Investing

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

Recommended by:

Grommit

staring

To: MCsweet who wrote (58516)	11/19/2016 8:49:04 PM
From: Spekulatius	2 Recommendations Read Replies (1) of 78915

Was dabbling in long short stuff a couple of years ago, but I basically found it too expensive to buy the insurance. If you do the math, it costs about 8% annually, to purchase insurance on the SPY around 8% is also the average equity return, which makes sense and basically means that there is no risk free return. As an individual investor, there is friction cost, so the cost of insurance would be higher than 8%. Not worth it, imo. Better to risk a 30-40% correction once in a decade. Example - and the $218 strike price put for SPY is listed for $15.8 right now, which is roughly 7% annualized (a bargain by historical standards). If you buy one out for $15.8 for every SPY ETF you own, you would be fully insured against a market correction until Dec 2017.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next