portfolio insurance

portfolio insurance definition - finance
The use of stock index futures, or other hedging devices, to protect the value of an investment portfolio if the market declines. Portfolio insurance can be created by selling stock index futures short (selling futures that you donÂ’t own) or buying stock index put options, which give the right to sell the stock index futures contract at a specified price.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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