You are here: Educational Videos » Options Plug-in » Portfolio Protection

Track 'n Trade Futures End of Day Options

Portfolio Protection

Video Transcript

In this Track 'n Trade Pro Options trading training video, I want to talk to you about how to buy under-priced Options to protect your portfolio. If you own any Futures contracts, this is an excellent way to protect your holdings against a major market incorrection.

Here's how it works: First, look for under-priced, out of the money Put Options on the contracts you already own. An Option is under-priced when it's Option premium is less than the computed fair value. You can use Track' n Trade Pro, or ask your broker to help you with this.

This usually happens when you're picking an Option that is in the opposite direction of the markets momentum. Or the market seems stagnant, and not going in any direction. It doesn't look like it's going in any direction in the foreseeable future. Again, your broker can help you with this.

Buy these under-priced Put Options if the Futures market drops off of a cliff. These cheap Put options will dramatically increase in price. Your profit on these Options will help to offset the loss on your Futures. This is a low cost form of portfolio protection.

It's a good idea to buy under-priced Put Options that have more than 30 days remaining. This will further minimize time decay, making your insurance even that much less expensive.


Close
Questions: Call 1-800-862-7193, Ext. 2
Note: All data/software services are recurring