Too Late for Portfolio Insurance?

Ed D'Agostino
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April 11, 2025
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Comments

There’s no substitute for experience.

That was evident this week in the markets. While most people were confused or frozen, at least one investor was making money after spending the past few months positioning himself for a week like this one.

On Wednesday, Jared Dillian told his readers to cover shorts and sell the put options he suggested they buy months ago. Over the course of the day, he received nearly 50 “thank you!” emails from Daily Dirtnap and Street Freak readers who made money this week and this year.

Part of his strategy involves using options, but not for speculation.

Options are one of those areas where many investors know just enough to get themselves into trouble. They can even prove perilous for seasoned Wall Street professionals, as Jared recalled during our latest discussion, which I’ll share with you in a moment. (Like all good financial stories, it involves near ruin and a $2 million Miami Beach condo.)

Jared wants to stop people from shooting themselves in the foot. He believes options (done right), serve a critical function for investors: portfolio insurance. You insure your house, your car, and perhaps something as relatively low-cost as your cell phone. And yet, you might have more wealth tied up in your investment portfolio than in all those other assets combined.

Options can be part of the solution, and we dive into the mechanics of how that works in the interview.

The caveat, of course, is that you really need to know what you’re doing—and be honest with yourself if you do not. If you fall into the latter camp, Jared has written a fantastic new course for the “options curious” investor. It’s called The Options Masterclass, and I strongly encourage you to check it out.

As Jared says, “Options trading is volatility trading.” There is no shortage of volatility right now.

Click the image below to watch our interview. (Note: We recorded it last week, before the recent market whiplash.)