How to buy long dated put options on major indexes?

[Gopinath]

Hello,

 

I am trying to find a way to buy long dated put options(more like FFH put options) on major indexes specifically for hedging. Has anybody tried & succeeded?

 

Gopi

[stahleyp]

The only way I'm aware of is by being an institution. I think you need something called an ICSD or something like that.

[gfp]

I think it's a standardized ISDA document,  http://www2.isda.org/

 

You can go out to December 2013 with standard SPY leaps.

 

Remember that the further out you go with index puts, the closer you are to taking the other side of Buffett's trade.

 

Klarman buys way out of the money yield calls over the counter.  There are shorter duration yield calls available on exchanges.

 

At the end of the day, if you want to hedge your portfolio, it may be better to sell short the various index futures.  Many large cap equities don't look overpriced to me, I wouldn't go for it myself.  Cash is the best insurance against a weak market.

[stahleyp]

 

Klarman buys way out of the money yield calls over the counter.  There are shorter duration yield calls available on exchanges.

 

At the end of the day, if you want to hedge your portfolio, it may be better to sell short the various index futures.  Many large cap equities don't look overpriced to me, I wouldn't go for it myself.  Cash is the best insurance against a weak market.

 

What is a money yield call?

[gfp]

"way" out of the money means a strike price way higher than the current interest rate.  (so the option is very cheap)

 

yield calls are just call options that reference a treasury interest rate.