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Fund Protection With Active Trading
- Use active, uncorrelated trading on the other side of the book to offset the ongoing premium bleed from buying protection.
- Accept small misses on moderate declines; the aim is to protect against very large, rapid crashes.
Match Exposure To Shock Profiles
- Volatility shocks differ by product and basis risk matters: S&P moves and VIX moves are not perfectly correlated.
- Construct buckets across instruments and maturities to match the shock profile you expect.
Execution Changes The Payoff Math
- Hunt for execution quality and price when buying tails; fills dramatically change convex returns.
- Treat tail buying like value investing: cheaper fills multiply returns when tails hit.