In the mid-1800’s Chicago had become a major hub of grain and livestock trade. Buyers such as millers and exporters; as well as suppliers were looking for a viable price discovery mechanism for the upcoming harvests. What eventually evolved was a series of “trading pits” around which brokers representing both buyers and sellers would negotiate prices using both hand signals and voice.

 

That system which was widely shown in the movie “Trading Places” has largely been superseded by computer price matching, but the basic principals still apply.

 

A modern example of risk management, or hedging a stock portfolio, is accomplished using E-mini S&P Futures (or their options). An excellent detailed description of this procedure can be found at this CME Group link.

 

This method of portfolio risk management was expanded in May, 2019 to include micro-

e-mini indexes, meaning it would apply to portfolios as small as $13,000.

 

Call us to explore if this vehicle of portfolio protection might be applicable for you.

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Click here to explore how portfolio protection might work.

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