Options, Hurricanes and Hedging

The purpose of my scribbles is not to provide you with a fish but to teach you how to fish (though sometimes some fish will sneak in). The scribble I am about to share with you I wrote to IMA's clients in January 2018. Its purpose was to explain why we were going to start hedging their portfolios with put options. IMA's clients are sophisticated individuals (this is why they hired us J), but they are not investment professionals (this is why they hired us). Therefore, I wrote this as much as to educate about stock options as to explain what we were about to do.