Insurance on stock portfolio

[globaltr]

I must admit I have come across some strategies in my time when it comes to current market conditions but hsi one has definitely given me the trading edge with my SMSF. Insurance over your stocks one of the smartest strategies.

Anyone else follow this stratgey?

 

[cutz]

Sounds interesting, got an example ?

 

[Ardyne]

yes. I buy atm put options and loan the money for my shares. Then along the way i roll up and down at .7 or .8 deltas to lock in profits or receive cash. Also my options talk to my loan so i cant get margin called.

Love it.

 

[vincent191]

I thought SMSF cannot trade options? Am I missing something? You can "insure" almost enything but is it cost effective?

 

[Ardyne]

got a friend who does it with his smsf but doesnt use leverage on the shares. I think he made about 30% on his fund from nov 07 till june 09 or thereabouts because of the rolling up and down.

 

[cutz]

I thought SMSF cannot trade options? Am I missing something? You can "insure" almost enything but is it cost effective?

Yeah,

There are costs involved, it's called negative theta.

 

[Krusty the Klown]

I thought SMSF cannot trade options? Am I missing something? You can "insure" almost enything but is it cost effective?

You can pretty much trade any financial instrument in an SMSF, its when you leverage that it becomes an issue. There was initial debate over warrants in SMSF's as there in inbuilt leverage, but they are allowed now.

If you have a house in your super, would you not insure it? Options can serve this function over your equities.