Options expert Seth Freudberg, of SMB Options Training Program, talks about something he calls a perfectly ineffective hedge.
Many options traders buy puts in a panic thinking they will control downside risk in their trades.
We did a study on weekly options and found that they were incredibly ineffective at controlling downside risk over the last year.
In fact, traders would have made much more money selling puts over the last year, which is counterintuitive and something to ponder strategically.
*no relevant positions
By Seth Freudberg, Director, SMB Options Training Program