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Index funds work by matching — or tracking — the performance of a stock market index. An index is a group of stocks that share similar traits. For example, the S&P 500 index represents the 500 ...
The PUT strategy is designed to sell a sequence of one-month, at-the-money, S&P 500 Index puts and invest cash at one- and three-month Treasury Bill rates. The number of puts sold varies from month to month, but is limited so that the amount held in Treasury Bills can finance the maximum possible loss from final settlement of the SPX puts.
Market participants are taking on a 'this is as good as it gets' mentality, and it may be time to think about hedging your portfolio against broader market risks
A call option on a stock index gives you the right to buy the index, and a put option on a stock index gives you the right to sell the index. Options on stock indexes are similar to exchange-traded funds (ETFs), the difference being that ETF values change throughout the day whereas the value on stock index options change at the end of each ...
Hedge funds also tend to charge higher fees than mutual funds. Many hedge funds have high minimum investments that can range from $100,000 to $10 million or more. That’s why mutual funds are ...
One possible approach, and one that is gaining increasing attention, is the use of replicating portfolios or hedge portfolios. The theory is that a portfolio of assets (fixed interest bonds, zero coupon bonds, index-linked bonds, etc.) can be selected with cashflows identical to the magnitude and the timing of the cashflows to be valued.
Bond portfolios, when e.g. a component of an Asset-allocation fund or other diversified portfolio, are typically managed similar to equity above: the Fund Manager will hedge her bond allocation with bond index futures or options; with the number of contracts, a function of duration.
The relative appeal of index funds, ETFs and other index-replicating investment vehicles has grown rapidly [42] for various reasons ranging from disappointment with underperforming actively managed mandates [40] to the broader tendency towards cost reduction across public services and social benefits that followed the 2008-2012 Great Recession ...