A.I.M. Users Bulletin Board

[Neil Scott]

Insurance,

Ho ho ho, even had the accountant at work asking me how much it would cost to buy index Put options to protect his portfolio.
I think he's asking me as I used to be an option trader, I had to give him disappointing news.

hard to believe that an accountant would not know the in's and out's of various financial instruments.

He wanted to buy a Put with a year expiry at around current index levels.
Now, this is kind of like asking for an insurance quote as your house is burning down, not quite the best time.

I worked it out that to buy an All Ords Put would set him back around $3,800 for around $60,000 worth of protection, if he went for a futures Put then that would cost a hefty $11,000 but then you get around $170,000 worth of protection.

But the time to buy is when everyone is happy and smiling and bullish, NOT when they are jumping out of windows.

Don't you just love all this irrationality.

Regards

Neil