Married Puts

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Jan 14, 2010 10:41 am

Does anyone buy Married puts with clients? Like BAC and a Jan 2012 20 put ?

How has it done for you?

Thanks!

Dash

Jan 14, 2010 1:17 pm

Sounds expensive.

Jan 15, 2010 4:36 pm

Some expensive insurance for a stock that'll be 40 by then.  Should offset with a naked one

Jan 16, 2010 2:05 pm
Milyunair:

Sounds expensive.

 
Typically it is a very expensive hedge all things considered. It's not nearly as expensive as it was in the recent high VIX environment. Even with a low VIX the stock may have significant implied volatility raising the price. The hedge ratio will also have a large influence on cost. 
 
There are much cheaper ways to hedge a stock against loss than a married put BUT it depends on the agenda employed and the length of time the hedge is needed.
 
Before you married it you may consider using a stop for free. If it's needed for an event like earning or guidance shorting against the box works well. I use all the above often.