Directional
Protective put
Hold the index through futures and buy a put as insurance.
How it works
The long future keeps all of the upside; the bought put puts a floor under the downside. This is the shape most people actually want when they say they are worried but do not want to sell, and it is priced accordingly.
What it costs you when you are wrong
The put costs money every cycle whether or not it is needed, and that cost is certain while the protection is not. Over a long run of quiet markets the premiums add up to more than the crash they were bought for — which is why insurance is sold at all.
The position
- 1Buy the put 2 strikes out of the money
- Enter
- 6 trading days before expiry
- Exit
- hold to expiry
- Legs
- 1
Test it yourself
This runs against real historical market data. Nothing is uploaded, nothing is stored, and the result is not a prediction — it is what this rule would have done, on that index, in that year, with the costs shown.