Index Option Strategies - Buying Index Puts to Hedge the Value
of a Portfolio   Investment decisions should not be made based
upon worksheet outcomes.   Who Should Consider Using Index Puts
to Protect a Portfolio?    • An investor who owns a portfolio of
mixed stocks and wants to protect its value on the downside.
Protective puts are commonly used by equity investors for
protection on the downside of the value of underlying shares
they own. Index puts may used for the same type of insurance on
portfolios of mixed stocks, providing limited loss in case of a
market decline. The degree of protection depends on the put
strike price selected. As the index goes down, the value of the
protective puts can increase, with profits on the options at
least partially offsetting any losses seen in the value of the
portfolio.   Index puts can be a very useful hedge to protect
the value of a portfolio of mixed stocks in case of a market
decline. Just as the way protective equity puts work, long index
puts can increase in val