Dividend and Hedging S&P500 with Options

[dagnyt]

Quote from heiasafari:

It depends on your market view I guess but IMO to do a collar you have to be fairly sure its not gonna go up a lot in the meantime.

How can you ever be 'sure' the market isn't going to rise rapidly?

The idea of the collar is to prevent a disaster - which you also cannot be certain is not imminent.

In my view, I don't see why the vast majority would want to take the risk of an open-ended loss?

Mark

 

[heiasafari]

my point was that if you want to buy a protective put, cough up the cash but in a market like this one, I would not go against the momentum by severely capping my upside thats all.

 

[spindr0]

Quote from heiasafari:

my point was that if you want to buy a protective put, cough up the cash but in a market like this one, I would not go against the momentum by severely capping my upside thats all.

Buying protective puts can be expensive and for some, it's not their preferred poison.