Disaster insurance for long-side index trader

[jerry11901]

I was reading that government was collecting the gold from people under treat of putting owners for ten years to prison.
Did it really happened? And what kid of gold was collected? Personal jewelry, collector coins? What about platinum, silver and palladium?

 

[Kevin Schmit]

Quote from Malinois:

I daytrade [ER2] equity index futures from the
long-side and would like to insure against ...
something which takes the market down several
percent or more instantly

OTM index puts in SPX, OEX, SPY or ES, whichever
looks cheapest and whichever you can get on the
bid. Don't worry about the correlation between
ER2 and any of these, in a sharp disaster-related
downspike, the correlation will go close to 100%.

Long index puts have a negative mathematical
expectation -- best-fit-to-market-data jump-diiffusion
paramerrs indicate option traders overestimate
downspike frequency by 50% or more and magnitude
by at least 25% -- but that is the price you will pay
for the insurance. If your portfolio consists mostly
of your long ER2 trades, your expected portfolio
log return will almost certainly be improved (greater
terminal wealth).

 

[murray t turtle]

Quote from Malinois:

Was wondering if anyone employed a strategy to protect themselves in the event of a sudden disastrous event such as huge earthquake in Tokyo, LA , a major explosion or some other calamitous event.

I daytrade equity index futures from the long-side perhaps 80% of the time and would like to insure against the unforseen while in a position. I'm talking about something which takes the market down several percent or more instantly, a situation where a resting stop does not work because all bids disappear.

I have considered some type of put option strategy but admittingly don't have much experience with them. Can anybody comment on what they do or would do under these circumstances.

============
Good question MAL;
1]Diversifiction, like location, location, location;
& diversification in time
2] Storehouse Tithe
3] Since you said something like 80% long;
include something short for sure . Also wouldnt aim at a perfect hedge, since i dont buy ''no deductable'' insurance either.
4]Think/work with the idea on,
for example1 long contract ES, you borrowed about $70,000/per contract, so to speak.
5]Bottom line= err on side of caution, cause suprise rate cuts have hurt shorts before.