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The securities are not just for speculators; they protect holdings from downside risk and generate added income from stocks.
"Such trades often are executed in response to market activity, and are undertaken to protect fund investors from downside risk," the firm said.
With Nasdaq halved and the Dow flirting with bear-market territory, the idea of protecting your portfolio from downside risk may seem a little like buying flood insurance when your living room is under four feet of water.
Guaranteed lifetime withdrawal benefits (GLWB) embedded in variable annuities have become an increasingly popular type of life annuity designed to cover systematic mortality risk while providing protection to policyholders from downside investment risk.
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But, as is often the case with executive pay, officers are protected from the downside, but benefit from the up.
This prevented Enron from being protected from the downside risk.
Increasingly, the industry is focused on state commissions: it wants relief from the downside of rooftop solar; relief from intrusive and misleading marketers of solar products; and, above all, protection of the grid's existing infrastructure.
You cannot gain from the stockmarket upside while being protected from the downside; you cannot have a guaranteed income for life and pass money on to your heirs and so on.All this may simply prove that people are essentially like Mr Creosote, they want everything on the menu in a bucket with a fried egg on top.
Democrats could also suffer from the downside to presidential coattails.
Not surprisingly, Mr. Kurland's critics accuse him of trying to profit from the downside of what Countrywide and other lenders wrought.
Derek Young, the president of Fidelity's Global Asset Allocation business, said that he was more interested in protecting savers from the "downside" of market turmoil than he was in capturing the "upside" of big market rallies.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com