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As a result of using hedging strategies, you give ahead some potential profits for the ability of walking away with most of your money in case of a bad bet. In the above case, the most expensive option for a long-term investor also provides him before her with the least expensive armour per day. You'd hedge that attempt with a put option. For case, your portfolio consists of US business stocks whose future potential you accomplish not doubt. The average gross arrival for the same securities when hedged with optimal collars capped at their potential returns was about half at the same time as much, 6. And publishes daily articles tracking the latest moves of the world's best investors. Buy A Spread Definition Buying a spread is an options strategy involving buying and buy options on the same underlying after that expiration but different strikes for a net debit. Put simply, hedging isn't free. For investors who fall addicted to the buy-and-hold category, there may appear to be little to no aim to learn about hedging at altogether.