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Hedging Your 401(k)An investor nearing retirement wants to hedge her 401(k) against a crash. Her plan has $200,000 in an S&P 500 index fund, $100,000 in her employer's stock, and $100,000 in bonds. Here are some choices: -- Spend about $10,000 to hedge the index fund until yearend by buying put options on the index, for a separate account -- Hedge the company stock by buying put options or taking a short position--again, in a separate account. Or, buy puts on a related industry index
-- Hedge the bonds with call options on an index of interest rates
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Updated June 4, 1998 by bwwebmaster
Copyright 1998, by The McGraw-Hill Companies Inc. All rights reserved.
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