Quick Calculation to Hedge Your Stock Portfolio

» Posted by on Aug 20, 2015 in Commodities, Options, Shop Talk, Stocks | Comments Off on Quick Calculation to Hedge Your Stock Portfolio

Quick Calculation to Hedge Your Stock Portfolio

financial portfolio review

financial portfolio review1. Determine which index or indices your stock portfolio represents:

    • S&P 500
    • Dow
    • Nasdaq
    • Russell

2. Determine size of your portfolio.

Calculation Example:

$1,000,000 S&P 500 Stock Portfolio to hedge

Current Market Price for Sep E-mini S&P 500 is 2050.00 x $50 (contract value) = $102,500

$1,000,000/$102,500 = 9.75

A proper hedge for your stocks within the S&P would require the sale of 10 contracts of E-mini S&P 500 futures. Alternatively, you can buy 10 E-mini Put options. (Consult your Broker for specific levels)


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