Islamic Finance
Dain Ghair Sahih
November 18, 2022
Finance
Examples of Hybrid Financial Instruments
November 19, 2022

A multiperiod option purchase strategy that is designed to avoid large losses in any single investment period by committing 10% of portfolio assets to the purchase of options (long calls and long puts) and investing the balance of the portfolio in fixed-income securities (e.g. Treasury securities). The percentage cut may vary in practice according to different considerations (e.g. 80:20, 70:30, etc).

 

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