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These valuations offer downside protection, since they are at a significant discount to the overall market.
Selling the calls to buy puts is a nice strategy because the puts offer downside protection in case the price of the underlying shares slides lower, while the sale of calls cheapens the price of this protection.
Therefore, we have argued for a strategy to remain invested in stocks, but stick to the companies that offer downside protection, reasonable growth prospects, and some yield.
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This mechanism offers downside protection for companies with high valuations, but costs millions of dollars.
"However, management's decision to focus on near-term margin improvements should offer some downside protection to shares, given the current bearish Street outlook," Thompson argued.
Diversification across these economically less-sensitive industry groups should serve MWV well even if the economy softens, he says, and the stocks healthy dividend yield should offer some downside protection.
For long-term stockholders, drops can offer opportunities, so downside risk isn't an absolute measure.
So, in terms of cold political calculation, giving airtime to any of his challengers might appear to offer Cameron mostly downside risk.
Indie movie deals typically offer no such downside protection.
We believe that current low valuations offer significantly lower downside risk than we ordinarily expect.
"The downside offers too much risk to existing equity holders," he said.
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com