A value safeguard strategy, also security strategy or Portfolio Insurance mentioned, is to protect the capital investor by means of financial instruments from unfavorable developments on the stock markets. While the investor without security participates upward or down fully at market movements, by the security its possible loss is limited - in response it loses in addition, a part of its profit possibilities.

Many value safeguard strategies reduce only the systematic risk of a Portfolios, thus risks by movements of the entire market. The unsystematical risk, the negative development of an individual plant, can be limited however by diversification (Portfolio Selection).

Value safeguard strategies are divided into static and dynamic strategies. When static securities the structure of the Portfolios is changed not or only once, with dynamic strategies takes place the adjustments however depending upon market process.

Common ones static value safeguard strategies are

• Stop Loss: During this individual value security a security is sold immediately, if its course falls below a given Limite.
• Protecting PUT (Protective PUT)
• Portfolio Insurance with calls

Common ones dynamic value safeguard strategies are

• Synthetic PUT
• Constant proportion Portfolio Insurance (CPPI): Depending upon market situation between risky shares and risk-free securities at fixed interest one shifts.
• Short Future

See also

• Investment strategy
• Portfoliotheorie
• Portfoliomanagement

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