Unknown Unknown
"There are known knowns. These are things we know that we know. There are known unknowns. That is to say, there are things that we know we don't know. But there are also unknown unknowns. There are things we don't know we don't know." - Donald Rumsfeld. It is that unknown unknown that makes me buy long term put options to hedge my portfolio. Although long term options are highly priced and bleed a lot with passage of time so I don't hedge my portfolio fully, but I hedge it partially. It is one battle that I enter to be prepared to lose. sometimes, The market provides an opportunity to compensate for the hedge. I had bought 22000 and 21000 of September 2024 expiry put options in the month of April 2024. It was fast losing money with passage of time but the pre and post Indian election volatility provided me an opportunity to close both the options in green. I also got an opportunity to buy December 2024 expiry after few days. 1