Case Studies: Hedging Single Stock Risk
Broken Pie Chart · Broken Pie Chart
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Show Notes
Jay Pestrichelli and Derek Moore are back to walk through several examples of how we hedge concentrated stock risk. Various techniques like direct hedging, covered calls, volatility selling overlay, and more are talked through. See how it would play out with stocks like Conagra, Apple, and Proctor and Gamble where they explain targets and outcomes when hedging was needed and when it wasn't. What are the tradeoffs between upside capture and hedging? Plus, get a sense how it may be more complicated than simply owning a stock and buying protection. Get insights into the process of managing positions and benefits for the end clients.
Presenting three distinct case studies hedging concentrated single stock risk
Hedging programs versus buy and hold Apple as single stock
How much upside do you give up when implementing a hedging strategy?
Toolbox for generating premium and offsetting losses
How much downside protection do we put on?
Each stock is different in hedging approach
Process and initial discussion with clients around hedging their positions
What does a low-cost basis mean relative to taxes?
Designing structured exits over time for single stock holdings
Why people hold large single stock positions
Review of differences in volatility between the market and a single stock
How volatile has Apple's stock been historically?
Mentioned in this Episode:
Contact Derek www.razorwealth.com
Why covered calls are not a good hedge https://podcasts.apple.com/us/podcast/why-covered-calls-are-not-a-true-hedge/id1432836154?i=1000455815806
Derek Moore's book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr
Article showing how investors made poor decisions at market bottoms https://zegafinancial.com/blog/can-buffered-and-hedged-equity-strategy-save-investors-from-making-behavior-mistakes
Jay Pestrichelli previous podcast appearances https://zegafinancial.com/in-the-news/podcast
Schwab's guide to investing and taxes https://www.schwab.com/public/schwab/investing/retirement_and_planning/taxes/current-rates-rules