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Is now a good time to hedge?

The same read our advisors use: implied volatility, IV rank (where volatility sits in its 1-year range), term structure (how option prices compare across expirations), and the real dollar cost of protection, in plain English. No login required.

Hedge timing

Is now a good time to buy protection?

A composite read on how expensive downside protection is right now, driven by implied volatility, its percentile rank, the term-structure shape, and implied-vs-realized vol. Hover any chart for what it means.

71timing score / 100
Favorable time to hedge

A higher score means protection is cheaper to buy. Roughly: 66+ is cheap, 40 to 65 is fairly priced, and below 40 is expensive. A mid score means premiums are neither a bargain nor stretched.

Protection is cheap right now.

Implied volatility is low and sits in the bottom of its 1-year range, the term structure is in contango, and implied vol is only modestly above realized. Insuring concentrated positions costs less than usual, a favorable window to enter or roll puts.

VIX 14.2IV rank 22ContangoIV/HV 1.26

Implied volatility (VIX), 16 weeks

iLower is cheaper. VIX is the market's expected volatility. When it's low, options premiums are low, so puts cost less. Below ~16 is a cheap window; above ~28 protection is expensive.Sample

Current 14.2, in the cheap zone

Favorable
cheap · below 16expensive · above 2814.2

IV rank

iWhere today sits in its 1-year range. IV rank of 22 means implied vol is near the low end of the past year, so protection is historically cheap. High rank = stretched.

Percentile of 1-yr IV range

22/ 100
cheapexpensive
Bottom quartile

Term structure

iCalm markets slope up (contango). When longer-dated options cost more than near-dated, markets are calm and hedges roll cheaply. An inverted (backwardation) curve signals stress and pricier protection.

Front vs. M2 vs. M3 implied vol

M114.2M215.1M315.9
Contango (calm)

Implied vs. realized

iHow much you overpay for certainty. Implied vol (option price) vs. realized vol (actual moves). A ratio near 1 means insurance is fairly priced; well above 1.3 means you're paying a steep fear premium.

IV30 vs. HV20

IV 14.4

HV 11.4

Ratio 1.26

Annualized cost of protection

iThe bottom line in dollars. Estimated yearly cost of a systematic put program as a percent of protected value. Today's 1.20% is near the 16-week low.Sample

Sized to ~70% of portfolio beta · 16-week trend · today near the 16-week low

~1.20%/ year
Strategies in scope

How to express the hedge

Three governed strategies, each scored against the client's budget and downside target. The engine recommends the most cost-efficient fit for the current regime.

Right now the timing score reads favorable, so the highlighted fit below reflects today's pricing. In a cheap regime a plain protective put is usually the best value; when premiums are elevated, a put spread or collar trims the cost. The structures engine still prices the exact legs per client.

Strategy payoffs at expiry

iHow each hedge reshapes your outcome. Portfolio profit/loss vs. where the market lands. The put floors losses; the put spread floors a capped band and costs less; the collar floors the downside but caps upside to pay for itself.

Profit/loss (%) vs. market move · put strike −10%, spread −10/−25%, collar −10% put / +15% call

gainloss−40% market+40% marketflatput −10%call +15%
UnhedgedProtective putPut spreadZero-cost collar

Protective put

Buy a put

Recommended now

Cost

~1.2% / yr

Protection

Full downside below strike

  • Floors losses below the strike
  • Unlimited upside retained
  • Highest premium of the three

Best when protection is cheap (low VIX): the simplest, most complete hedge.

Put spread

Buy put / sell lower put

Cost-efficient

Cost

~0.5% / yr

Protection

Capped band of downside

  • About 55% cheaper than a put
  • Protection capped at lower strike
  • Ideal in higher-IV regimes

Best when premiums are elevated: cuts cost by capping how far down you are protected.

Zero-cost collar

Buy put / sell call

No cash outlay

Cost

~0% net

Protection

Floor with capped upside

  • Premium offset by sold call
  • Caps upside above call strike
  • Tax-aware, no liquidation

Best for low-basis concentrated stock the client will not sell: finances the put by capping upside.

Illustrative analytics for advisor decision support. Market inputs refresh from the BallastX timing engine; sample series shown where live history is unavailable. Not investment advice.

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