[PaywallBuster]

I wonder why is there no "market insurance" products/services...

Could be a simple monthly subscription which buys managed basket of options (call on VIX, puts on SP500, Nasdaq, etc)

Or should the average retail investor get into the Black Swan ETF (https://www.amplifyetfs.com/swan.html) or similar to protect against these events?

[xyzzyz]

Of course there are. You can just buy put options, and if the market goes down, you can exercise or sell them, which limits your downside risk.

[dan-robertson]

Because you would expect to lose money on it? That is, you should expect that in the long run the insurance would cost a little more than the amount it pays out and it sounds like you’d want insurance against losing money in a crash so buying insurance is just losing that money early.

Obviously that’s only true in the long term. There were some times when buying insurance may have been a good idea (eg early 2020) but that’s easier to say in hindsight. If you’re managing savings for a pension then this kind of thing could make sense as you get old because you mightn’t live long enough for the costs to average out. But the normal way to deal with that is adjusting the balance between equities and bonds.

[PaywallBuster]

The Black Swan ETF already does it

It's 90% of treasure bonds and some small percent of options

On a bulish market, you loose some performance (insurance costs) for renewing the options

On a bearish market (crash) your bonds loose market value, but the options will go up N amount of times. which will give you overall positive performance.

If the market stagnates, you'll loose money as the options continue to be renewed while the bonds are stable.

And you don't need to allocate all your portfolio to this ETF, can simply combine it with everything else you have. ----

Anyway

I've done this before, I believed the market could become wild

I bought VIX options and got lucky with a 20x score

Obviously this is not that easy or accessible to retail investors (and it's gonna cost at least 100$ monthly)

But if one's to believe we're near the peak, and the crash could be coming any time soon (next couple of months), buying this kind of insurance would make sense (I think about it as Insurance as a Service, because I just want a simple monthly subscription for the work behind the scenes)

[rdtwo]

Wow Vix options trades… that’s pretty bold that’s a super complex instrument with some odd rules.

[PaywallBuster]

i got the tip from zerohedge lol

in the end it's just another market traded instrument, and you can sell it before expiration for a possibly better price

[fbn79]

People wanna get rich quickly. Dont want to buy products that underperform SPY because of edging and managing expenses

[PaywallBuster]

SPY can crash 50% or more just as likely, therefore why I suggest some sort of "insurance".

Even if SPY would be better than any less diverse or hand picked options from retail under the same crash market conditions

[nabla9]

You can buy "market insurance", but the cost is high.

More complex the product, higher the counterparty risk.

[lotsofpulp]

>I wonder why is there no "market insurance" products/services...

Paper currency, FDIC insured bank accounts, CDs, TIPS, Treasuries, VCSH…

Biggest of all, having a network of people that can and will help you (such spouse, kids, grandkids, cousins friends, political allies, etc)

[PaywallBuster]

Certainly,

my idea is that if you have a stock portfolio, you could get "insurance" on it

Big banks and investment funds certainty do it, one way or another

I'was simply thinking of a more accessible approach to retail investors

"insurance as a service", pay 50$ per month for protection against stock crashes

Technically, I'm guessing this would not be called "insurance" but a financial instrument or investment which buyers/investors would get benefits under certain conditions.

[lotsofpulp]

> Big banks and investment funds certainty do it, one way or another

I do not know what you mean by this, but hedge funds hedging their positions is not “insurance”.

You cannot earn a return with no risk. If you want to de risk, the counter party is going to want commensurate payment to take on the risk plus a profit premium.

Just like you cannot profit off of auto insurance (unless you have inside knowledge of their premium pricing and can game it), you would not be able to profit off of “insuring” your investments, which would defeat the whole point of investing. At that point, just invest in less risky things, like bonds or cash.

Note that risk has a time component, so risk for an equity index fund for year 0 to 3 will be higher than a bond fund, but for years 20 to 30 it might be basically the same. So insuring yourself against risks for an investment in an equity index fund you do not need for 2+ decades is pointless.

[PaywallBuster]

good point hedging != insurance

this goes to my last point

> Technically, I'm guessing this would not be called "insurance" but a financial instrument or investment which buyers/investors would get benefits under certain conditions.

I would not expect to have this insurance for long periods of time

But could be interesting when it feels like we hit the peak of the market

[lotsofpulp]

If you are not going to have the insurance for long, then just skip the middleman and buy a bond index fund or treasuries yourself. There is no need for this type of insurance product to exist…since it already exists for cheaper.

[PaywallBuster]

They wont' go up in value to make up for your losses in the stock market?

[prirun]

There is: annuities.