Show Notes: http://optionalpha.com/show176
Hedging stock positions can be tricky business. One of the most common schools of thought is to use a simple protective put strategy whereby a stock investor would simply purchase a long out-of-the-money put option to act as "insurance" in case the stock fell. Sounds logical but we're skeptics here at Option Alpha and so we went on a hunt to see what research and data say about the protective put strategy and it's effectiveness at protecting or hedging stock positions.
