Last week Jay and Derek did a podcast conversation around concentrated stock risk. This week they are back to take a deeper dive using some case studies and additional detail around holding large concentrated single stock positions. The summary, show notes as well as links discussed in the program are below.
You can click below to listen to this latest episode:
Jay Pestrichelli and Derek Moore are back to walk through several examples of how we hedge concentrated stock risk. Various techniques like direct hedging, covered calls, volatility selling overlay, and more are talked through. See how it would play out with stocks like Conagra, Apple, and Proctor and Gamble where they explain targets and outcomes when hedging was needed and when it wasn’t. What are the tradeoffs between upside capture and hedging? Plus, get a sense how it may be more complicated than simply owning a stock and buying protection. Get insights into the process of managing positions and benefits for the end clients.
- Presenting three distinct case studies hedging concentrated single stock risk
- Hedging programs versus buy and hold Apple as single stock
- How much upside do you give up when implementing a hedging strategy?
- Toolbox for generating premium and offsetting losses
- How much downside protection do we put on?
- Each stock is different in hedging approach
- Process and initial discussion with clients around hedging their positions
- What does a low-cost basis mean relative to taxes?
- Designing structured exits over time for single stock holdings
- Why people hold large single stock positions
- Review of differences in volatility between the market and a single stock
- How volatile has Apple’s stock been historically?
Mentioned in this Episode: