Minimized downside risk while retaining upside

CFA Level III
#1

  • Buy put

  • Prepaid variable forwards

…any other ideas?

#2

does a prepaid variable forward retain upside? Haven’t you already committed to selling the stock forward to a dealer?

#3

In addition to being long the underlying (which I assume you mean), you can go short futures and long calls.

#4

A PVF is essentially collar+loan, hence i doubt it still maintains upside unlimited?

#5

If stock goes up, less shares are delivered against the loan so yes you do keep the upside in a PVF.