Hedging your stocks
With a 12% return thus far this year, Applied is still one of the cheapest tech stocks around, especially for a company with a giant franchise. It fetches just 15 times next year’s projected Hedging is not a technique you use to make money, but rather to reduce a potential loss. When you hedge a stock, you are ensuring that stock against a negative event by making a secondary The holder of the CBOE S&P 500 5% Put Protection Index (the hedge using rolling 5% out-of-the-money, one-month puts) ended up 8.33%, having given away 3.6 percentage points in insurance costs. The hedge cost 6.4% in aggregate across 12 consecutive months and had a few short-term payoffs totaling 2.8%,