What Is Portfolio Insurance?

Portfolio managers use stock index futures to protect stock portfolios in case the stock market falls.

Portfolio insurance

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Portfolio managers use stock index futures to protect stock portfolios in case the stock market falls.
[English] investment combination insurance
The fund manager sells index futures when the stock depreciates, rather than actually selling the stock; if the stock market continues to fall, the portfolio manager repurchases the index futures at a lower price and uses the profits to make up for the stock portfolio's losses. On "Black Monday", the market was unable to effectively process a large number of buy and sell orders, and everything was deadlocked except for the disappearance of the role of portfolio insurance.

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