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Portfolio insurance

• A strategy using a leveraged portfolio in the underlying stock to create a synthetic put option. The strategy's goal is to ensure that the value of the portfolio does not fall below a certain level.

• Is a form of hedging equity products, although others include credit instruments as well. Sometimes, this process is called dynamic hedging because it requires quick adjustments in the hedge. Initially, futures were used at various stop points to serve as synthetic put options. However, rapid and abrupt price moves can cause serious imbalances in the hedging mix.

 
 

Follow this link for all the terms related to portfolio.

 
 Embedded terms in definition
 Credit
Dynamic hedging
Equity
Futures
Hedge
Hedging
Instruments
Leveraged portfolio
Options
Option
Portfolio
Put option
Put
Stock
Stop
Underlying
 
 Related Terms
 

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