Portfolio Hedging Helper.
Protect What You've Built.
Find the right hedge to protect your portfolio from market downturns without sacrificing all your upside.
Portfolio Details
Hedge Instrument (Put Option)
Hedge Recommendation
Optimal position to protect your portfolio
Enter parameters to see hedge recommendations
How Hedging Works?
Hedging is like insurance for your investments. By buying Put Options, you gain the right to sell an asset at a specific price (Strike Price), protecting you if the market falls below that level.
The Formula
Contracts needed = (Portfolio Value × Beta) / (Index Price × Delta × Multiplier)
This calculates a "Delta Neutral" hedge, aiming to offset portfolio losses dollar-for-dollar with option gains.
Key Terms
- Beta: How volitile your portfolio is compared to the index. (High beta = needs more protection).
- Delta: How much the option price moves for every $1 move in the index.
- Multiplier: The size of one contract (e.g., 50 for NIFTY, 100 for Stocks).
Frequently Asked Questions
How many put options do I need to hedge my portfolio?▾
Contracts needed = (Portfolio Value × Beta) ÷ (Index Price × Put Delta × Contract Multiplier). Example: $100,000 portfolio, beta 1.2, SPY at $500, put Delta 0.40, multiplier 100. Contracts = ($100,000 × 1.2) ÷ ($500 × 0.40 × 100) = 6 contracts. Our Hedging Helper calculates this instantly for your specific portfolio.
What is the cheapest way to hedge a stock portfolio?▾
A collar (sell covered call + buy protective put) is often near-zero net cost. The premium collected from selling the call funds the put purchase. You cap your upside at the call strike but protect against downside below the put strike — at minimal net cost.
When should I buy portfolio protection with options?▾
Buy hedges when IV rank is below 30% — options are cheap (like buying insurance before a storm). Don't buy hedges during crashes when IV spikes to 60-80% — too expensive. Think of portfolio hedges like insurance: buy proactively before you need it, not reactively after the market starts falling.
What is beta in portfolio hedging?▾
Beta measures how sensitive your portfolio is to market moves. Beta of 1.0 = moves in line with the index. Beta of 1.5 = moves 50% more than the index (more volatile). A high-beta portfolio requires more put contracts to achieve a delta-neutral hedge. Tech-heavy portfolios typically have beta above 1.2.
Guides that explain this calculator
- Hedging with Options: Protect Your Portfolio from CrashesProtective puts, collars and portfolio-level crash protection.
- Risk Management 101: The 1% Rule That Saves PortfoliosCapital preservation and the asymmetric maths of recovering a loss.
- Position Sizing: How Much to Invest in Each StockDeciding how much before deciding whether — the highest-leverage habit.
- Diversification: The Only Free Lunch in InvestingWhat genuinely diversifies, and what only appears to.