Re: Puts as Hedge against Real Estate Decline
Isn't this scenario like buying covered calls to hedge against a stock price decline?
After 30yrs of investing my parents lost every dollar gained, AND some invested principal, after the tech bubble burst.
I was managing a friends stock account at the time and told him that 90% of the companies were lieing on their quarterlies and he should liquidate his portfolio. He did all except on one big holding. He then sold covered calls on that holding WEEKLY. He ended up making money during the bust.
Too bad my parents didn't take my advice.
So in other words there are always people willing to take the other side of the bet. You just have to find a price.
The reason that the puts are so expensive is because the demand for them is so HIGH, EVERYONE is betting against the RE market right now.
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