Jay Pestrichelli and Derek Moore are back to walk through several examples of how we hedge concentrated stock risk. Various techniques like direct hedging, covered calls, volatility selling overlay, and more are talked through. See how it would play out with stocks like Conagra, Apple, and Proctor and Gamble where they explain targets and outcomes when hedging was needed and when it wasn’t. What are the tradeoffs between upside capture and hedging? Plus, get a sense how it may be more complicated than simply owning a stock and buying protection. Get insights into the process of managing positions and benefits for the end clients.

Presenting three distinct case studies hedging concentrated single stock risk

Hedging programs versus buy and hold Apple as single stock

How much upside do you give up when implementing a hedging strategy?

Toolbox for generating premium and offsetting losses

How much downside protection do we put on?

Each stock is different in hedging approach

Process and initial discussion with clients around hedging their positions

What does a low-cost basis mean relative to taxes?

Designing structured exits over time for single stock holdings

Why people hold large single stock positions

Review of differences in volatility between the market and a single stock

How volatile has Apple’s stock been historically?

Mentioned in this Episode:

Contact Derek www.razorwealth.com

Why covered calls are not a good hedge https://podcasts.apple.com/us/podcast/why-covered-calls-are-not-a-true-hedge/id1432836154?i=1000455815806

Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr

Article showing how investors made poor decisions at market bottoms https://zegafinancial.com/blog/can-buffered-and-hedged-equity-strategy-save-investors-from-making-behavior-mistakes

Jay Pestrichelli previous podcast appearances https://zegafinancial.com/in-the-news/podcast

Schwab’s guide to investing and taxes https://www.schwab.com/public/schwab/investing/retirement_and_planning/taxes/current-rates-rules