STANDARD BANK TOP40 PUT WARRANT (TOPSBT)
Protection for your portfolio
A LOT OF people have been asking me if I am nervous about the current market conditions and the answer is no. Not because t he market doesn’t l ook troubled, but because I invest so I can sleep well.
That said, my lazy weekly system is 100% in cash for the first time in five or six years. That may be meaningless or may foretell something. As I always state, I continue to hold the awesome stocks in my portfolio and have been exiting the “less awesome” stocks over the past few months - as I have written here.
But for those wanting some protection for their portfolio, a long date put option is a nice and easy insurance option that will appreciate in value as the market falls (losing money if it rises).
TOPSBT expires in April next year and has a current gearing of around -3x, so for every 1% decline in the Top40 Index, the warrant will gain about 3%. It’s gentle and can be bought via any JSE broker. But caution, if the Top40 is above 60 000 in April it will expire worthless.