During a quarterly investment review, the client asks Alex about the portfolio’s large overweight in Energy Sector. Alex states that, given the increased demand from Manufacturing Sector, he expects energy price to remain high. Given a known large supply of energy coming to the market, the client is still concerned about the concentration risk in the portfolio and asks Alex to explore ways to mitigate the tail risk of falling energy prices.
Which of the following approach that Alex can use to manage the tail risk of falling metal prices in his portfolio is least likely correct?
正确答案是: C
A
Overweight Manufacturing sector, underweight Energy sector
B
Buy CDS on Energy sector
C
Write put option on Energy Sector
I thought buy CDS equals to selling an insurance for the energy sector, how can this manage tail risk of falling metal prices?
