portfolio insurance investment & finance definition
The use of stock index futures, or other hedging
devices, to protect the value of an investment portfolio if the market
declines. Portfolio insurance can be created by selling stock index futures
short (selling futures that you don’t own) or buying stock index put options, which give the right to sell the
stock index futures contract at a specified price.
See portfolio insurance in Wall Street Words
The futures or option contracts that serve to offset in whole or in part changes in the value of a portfolio. For example, a portfolio manager might sell short stock-index futures to hedge an expected decline in the market value of a portfolio.
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