In the previous post, we discussed using long puts for deep hedging. But as mentioned, the scenarios that truly call for long-put hedges are typically panic-driven sell-offs—they don’t happen that often. Statistically, over the past ten years, they’ve occurred about once per year on average, and in some years they don’t occur at all.
By contrast, milder, more contained pullbacks happen many times every year. These ty...

In the previous episode, we covered the first—and most important—way to deal with drawdowns: cutting exposure. As a quick recap, what are the advantages of proactively trimming positions when markets start to fall?
In this episode, we move on to the second line of defense: hedging with options.
1. When to Hedge?
Before we dive deep into hedging strategies, it helps to identify differences between two types of drawdowns:
A tech...

Palantir delivered a very strong Q4 earnings: quarterly revenue reached $1.4068 billion, up 70% YoY. Q4 GAAP net income came in at $609 million, adjusted EPS was $0.25, and adjusted free cash flow reached $791 million. On the demand/visibility side, the company disclosed that Q4 TCV (Total Contract Value) hit a record $4.262 billion, and U.S. commercial RDV (Remaining Deal Value) continued to grow rapidly. ...