UnThreaded | Threaded | Whole Thread (28) | Ignore Thread Prev Thread | Prev | Next | Next Thread
Author: Dwdonhoff Big gold star, 5000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76095  
Subject: Re: Strategy comparison S&P500 vs. IUL Date: 4/4/2013 1:32 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 0
Hi JAFO,

How does that property insurance policy protect anyone from a decline in the value of the house.
After a fire (absent the expense of subsequent rebuilding) your home will usually be worth less on the open market than prior to the fire.

There is are no equivalents to puts and calls for homes.
Sure there are, puts and calls can be written on any underlying asset. For individual real estate assets specific option contracts can (and are) written.

And if you have to move across country and sell your house after the real market has turned down, how does the insurance policy hedge such risk?
You're eitehr intentionally, or accidentally, reaching... to try to equate the hedge of hazard insurance to market volatility insurance.

If its easier to understand, you *could* trade specific options on the ownership of your own home with local expert real estate investors/agents. You could go long ownership of your home, and buy a put option (the discretionary right to sell it at a specific price during a limited period) to a local investor, at some mutually agreed price. You can negotiate the same with calls (long or short.) You can't "borrow a house to sell" (at least not very easily,) so short positions would have to be entirely synthetic (long put, short call,) but certainly doable.

Not typical... but the point is conceptual... and the investment account management is actual.

Dave Donhoff
Leverage Planner
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (28) | Ignore Thread Prev Thread | Prev | Next | Next Thread

Announcements

The Retire Early Home Page
Discussion on accelerating retirement day.
Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Post of the Day:
Apple

Wal-Mart Nixes Apple Pay
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement