 Good day, fellow investors. Today I'm going to go through the mechanics of going short or buying put options or hedging yourself, hedging your portfolio. And you will see that hedging your portfolio isn't really that expensive now. So let me immediately start with the mechanics of that. The first thing you can do is go when going short is to sell a stock short. This means that you borrow the stock from your broker, which takes it from somebody else. You pay an interest rate on that because you're borrowing, you're going on margin. So you have to pay a cost to that. And then you sell that on the stock market, you get your cash. Of course, that cash has to be kept as collateral. And then when the stock price drops, you rebuy the stock and return it to whomever has landed it to you. That's one way. However, that's unlimited risk, limited upside. The other option is to buy a put option. And here it is again risky, but you can get hedged, you can get protected. So you know, okay, this is the cost, your loss is limited, and the upside is unlimited. I'm going to show this on an example of in Tesla and how Ray Daily went short in Tesla and how it didn't work out, but he knows what he's doing. I hope so. This is the December 2018 2.5 euro put option on in Tesla. And you can see a year ago, the price was around 90 cents. Now it is around nine cents. This means that it has lost what 90% of its value and Ray Daily went short somewhere in the fall of 2017 when the price was around 25. So it lost more than 60% of its value since Ray Daily went short. So if the stock price doesn't drop below the strike price of the put option, you lose your money. Only if the stock price drops further, you start making money. This is the risk of buying put options. However, if those are as a hedge as insurance, then you don't mind, you're even happy to lose your money on your put option because you have made money on the things you are long. We can see here that the stock price went from 2.2 in March 2017. This is a little yearly chart and then it went up to 3.2 and now it's around three. So there are still options to buy in the long term, but where will Intesa stock be in the next three, six months, a year, two years? What are the possibilities to buy options? So it's a lot about timing. If you think that Intesa stock will be lower than 2.4 by December, then you might be interested in the nine cents 2.5 put options on Intesa for December 2018. Going back to the put option, if you buy it now at nine cents and the stock price drops, let's say to one, you will make 15 times your money. And that's what I call a hedge or insurance. You pay this if Intesa really drops down like a rock, you are very well protected. So it's interesting also to combine going long and going short depends on the price what you're paying for that. The key is that if you think Intesa will go to one and the price is 0.09 for that and it will go to one very quickly, you can be short, I don't know, six years, seven years by buying this nine months ahead puts because it will cost you pennies, pennies, pennies, pennies on the gains you can make. And that's a very long term risk perspective. However, it's counterintuitive because you are paying insurance for something. That's it. So you are paying, paying, paying, paying, paying and at some point in time you will lose your patience and you will stop paying and maybe just the next day the stock will crash. So again, it takes nerves of steel to be short. Let's look at other shorting possibilities buying put options. I don't like the unlimited risk of going short. So let's see what is the cost of hedging yourself from the SAP and the NASDAQ index perspective. This is the option chain for December 2020. So what a year and a half, a year, more than a year and a half from now, and you can pay $27 to be hedged at the current price for the SAP 500. This is the SAP 500 ETF. So 10% to be hedged for more than a year and a half. And then if that drops, you know you can't lose anything. So if you think that the SAP 500 will go much higher, much more than 10% in up in the next year and a half, and you are long, if you want limit your downside, you can buy a put option. Similar situation with the NASDAQ, again, to hedge yourself for December 2020, it costs 10%. Now going back on the hedges, is your BMW hedged, insured? Yes. Are you paying insurance on your house? Yes. Why people aren't paying insurance on their portfolios? Because it's expensive and it's not natural. However, depends on where you are in your life, you might want to think about paying for insurance. And if you like the risk, if you like thinking about that long-term asymmetric risk reward possibilities like shorting in Tesla now at buying an out-of-the-money put at zero at 9 cents, then you might also think about that as a strategy, but it takes a lot of learning and it's not something that you can just do, okay, let's try and that bet because that will lead to losses and wrong timing probably. So if it is part of a well-planned long-term strategy, then you might get interested more in the mechanics of buying put options as short hedges or as real tools to make money, especially if you know more about the stock than the rest of the market. Thank you for watching. Looking forward to the comments. I'll see you in the next video.