ou want to hedge against your stockportfolio value declining more than8% next month.Currently,the S&P500is standing at2,000and your portfolio has a beta of0.8.To achieve this goal,the best strategy isprotective put using S&P500index put option.In other words,you need to buy S&P500put options but there are many differentexercise prices to choose from.

Find the rightexercise price for S&P500put option.

1850

1800

1900

1950