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Buying a PUT option on Fear





Buying a PUT option on Fear

A basket investing strategy.

April 22, 2020 at 12:48:48 PM

Quick Update

In the recent times, capital markets have been very divergent in nature. Most of the investor’s portfolios have drained in value whereas the broad market indices like NIFTY & SENSEX have been quite resilient to this fall. Large cap stocks are all in the green and command a strong valuation, at the same time the very discounted mid & small caps show no sign of revival. In-spite of knowing these facts it is tough for investors to control their emotions and buy into the stocks that have lost a lot of value irrationally because of the feared markets. We agree that it is difficult to practice than to preach & hence Instead of preaching to follow non-emotional investing, we have done a study to build a strategy that is capable of providing a viable and a risk controlled approach towards benefiting from market crashes like the current one. In analogy, how to buy a PUT option on the currently prevailing fear in the mid/smallcap stocks.

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