Author Archives: Dpinsen

Downside Protection For ADM

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In a post on Monday (“VXX Sucks”), our host Tim noted the double digit move in the VIX (though not in VXX, which has made longs’ money evaporate since inception) on the day. With volatility getting a mild bump, I thought I’d take a look at the hedging costs of a few widely-traded stocks trading near their 52-week highs. Agricultural powerhouse Archer Daniels Midland (ADM) was one that was relatively inexpensive to hedge. Here are two ways of doing that over the next several months. (more…)

Softening The Blow For Netflix Longs

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Shares of Netflix (NFLX) dropped nearly 7% on Monday, as Carl Icahn told CNBC that he may have sold half of his Netflix stake. In a post last month (“Investing alongside Carl Icahn while limiting your downside risk”), we presented a hedged portfolio constructed out of the holdings of Carl Icahn’s Icahn Enterprises (IEP) by the automated portfolio construction tool at Portfolio Armor. That portfolio included a hedged Netflix position, circled below. (more…)

Adding Downside Protection To Biogen

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Biotech stocks took a beating on Friday, with the ETF that tracks them, iShares Nasdaq Biotechnology (IBB), down 4.74% on the day. One of the harder hit biotechs was Biogen (BIIB), which was down 8.22% on the day. Despite the drop, Biogen had one of the 10 highest expected returns of the securities in Portfolio Armor’s universe as of Friday’s close. In case its actual return over the next several months ends up being in the opposite direction, here are a couple of ways to hedge it. (more…)

Two Ways Of Hedging SanDisk

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Shares of SanDisk (SNDK) hit a 52-week high intraday Wednesday, as the stock was added to the NASDAQ Technology Dividend Index. For those long SanDisk, here are a couple of ways to hedge it over the next several months.

1) Hedging With Optimal Puts

3.8% cost. Uncapped upside.

As of Wednesday’s close, these were the optimal puts* to hedge 1,003 shares of SNDK against a greater-than-20% drop over the next several months with optimal puts. (more…)