252  •   The Intelligent Option Investor
ETF [tracking the Standard and Poor’s 500 Index (S&P 500), which closed 
at 1,685.73 when these data were retrieved] expiring in about 10 months:
Strike/Stock ($) Ask Price ($) Premium as  Percent of Stock Price
0.99 106.60 6.3
0.89 50.90 3.0
0.80 25.80 1.5
This is still a hefty chunk of change to pay for protection on an index but 
much less than the price of protection on individual stocks.
1
Common Pitfalls
Hedge Timing
Assume that you had talked to me a year ago and decided to take my ad-
vice and avoid buying protective puts on single-name options. Instead, you 
took a protective put position on the S&P 500. Good for you. 
Setting aside for a moment how much of your portfolio to hedge, let’s 
take a look at what happened since you bought the downside protection:
S&P 500
1,800
1,700
1,600
1,500
1,400
1,300
1,200
1,100
1,000
8/1/20129/1/201210/1/201211/1/201212/1/20121/1/20132/1/20133/1/20134/1/20135/1/20136/1/20137/1/2013
GREEN