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Buy protection on a portfolio

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Buy protection on a portfolio

Hi MM, I hope you're doing well. I have a different type of question related to my investments. General advise is all I want For example say I've owned several bank shares for a number of years. While I'm not particularly pessimistic about the market, with a US election, the situation in China and the two ongoing wars without clear resolutions make me somewhat uneasy. Over the next 12 months, I still want to remain invested in the market, but I'm considering buying a put option for some downside gains if the market falls. If the market rises, I’m fine with losing the premium. My question is: Is there an ETF that I could invest in for this purpose, or would it be better to look for a put option on the individual bank stocks? Thank you Michael

Answer

Hi Michael,

  • Actual put options are a purer way of hedging specific stocks, and generally the most effective.
  • There are bearish ETF’s such as the BetaShares BEAR or BBOZ leveraged local ETF’s that inversely track the market as a whole.
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BetaShares Australian Bear Hedge ETF (BEAR)
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