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unemployment insurance through options
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this is a snapshot of the jan '17 puts for xbi, the biotech index.  the current price is $65.73. you can see that even the puts far out of the money are costly. the $40 put, if you get a fill at $3, means a 10x return if the index drops to $10. a 70x return for a mild, cyclic, drop isn't likely to happen.  sharing youtube links is an awful way to ask a question. the first was far too long to waste my time. the second was a reasonable 5 minutes, but with no example, only vague references to using puts to protect you in bad years.  proper asset allocation is more appropriate for the typical investor than any intricate option-based hedging strategy. i've successfully used option strategies on the up side, multiplying the returns on rising stocks, but have never been comfortable creating a series of puts to hit the jackpot in an awful year.
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