Portfolio Protection - Hedging

Given the dreadful performance of the market and my portfolio, it’s I think I’m coming to this idea too little too late.  I had previously thought about it, but was unsure about how to go about it.  Fortunately, SaintGermain over at the TMF explains how to go about hedging your portfolio via Spreadbets

My this is similar to my previous post about sector protection, though SaintGermain is protecting against an overall market crash:

Ok. The FTSE 100 currently stands at 3932. Now, let’s say you use a rolling spreadbet on the FTSE in order to hedge a 10% fall in your equities. Very, very,simply put, you will need to work out what a 10% fall in the index would be. In other words, 393.2 points on the ftse which equates to 10% of your equities or 10k. Therefore, you should bet short at 10,000/393.2=25.43pounds a point on the ftse.

I recommend checking out the full post.  Also thought his comment about “Bizarrely (to the long-only mindset) it is the potential for very sharp upwards moves in the market that scare me” was interesting.