Jim Dean![]() Sage ![]() ![]() Posts: 3022 Joined: 9/21/2006 Location: L'ville, GA ![]() | Hi, Vinay First, re repeatedly buying Puts ... Ed dealt with that cost in his webinar ... what he didn't spend a lot of time discussing was that every week/month when the put was rolled over, some of the old one's cost (unspecified) would be recovered when it was sold. Yes, there will be a net cost ... it is insurance for a price ... but Ed made that point. However, Keith's comments lead me to believe that the benefit from exercising the Put in the event of a crash will be less than Ed implied ... but he never actually quantified it since the sale of the Put was never tabulated. Hopefully that will come as N continues work on this. Re the classic trailing stop and diversification methods ... I was *not* proposing them as ideal nor completely effective solutions! Rather, I was trying to point out that using them *wisely* (and that's an important qualifier) can sometimes *ameliorate some* of the crash impact. Why? a. really big crashes often last more than one "bar" ... a tight SM would at least end the trade before another bar makes it worse, in those cases. b. during many med-large crashes, there are usually *some* symbols that *don't* crash ... esp if they aren't a part of major indexes. Admittedly it's tricky to predict which symbols might benefit from this disconnect ahead of time ... BUT if there's a lot of *intelligent* diversification in the portfolio, then there's a reasonable chance that *some* of the symbols might make it ok. So, to repeat ... tight SM orders and wise diversification can HELP in a crash ... but they can't completely obviate it. |