Hedging is costly: Why you should stick with buy and hold

General
1

Here’s an interesting article.

Buying put options for your portfolio is an expensive strategy; selling calls is a risky one. Neither is likely to improve your returns over the long run.

https://www.bloomberg.com/opinion/articles/2018-11-09/investing-buy-and-hold-is-best-even-in-times-of-volatility

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2

Buying and Holding is boring, There is no FUN in that. Many of us do investment for the thrill and adrenaline rush of taking that risk. We need to check everyday how our decisions are turning out.

3

@weaver_bird exactly same mentality here. But by trading more i have only lost. But with investing and less trade i have always gained. Peacefully can eat my curd rice with pickle at office when market crashes

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4

Hedging works only in few situations and in the scenario where you have huge holding in that stock -

Recent examples where hedging would have worked -

  1. January 31st - Nifty has made all time high inflated bubble figure of 11000 and next day is Union Budget. And lets assume you have a huge portfolio. If you dont hedge with FNO, then I guess you are telling operator - “aa bail mujhe maar”

  2. Yes Bank in September - RBI is taking a decision on CEO’s continuance, and lets assume you have big Yes bank holdings. If you didnt buy put options, again you are putting yourself in risk

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5

@Newbie420

Hindsight is always 20/20.

6

Buying put options for your portfolio is an expensive strategy; selling calls is a risky one. Neither is likely to improve your returns over the long run. As long as the market is going higher, your puts will expire worthless. That is why you should stick to buy and hold.

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