Defensive strategy on the Cac 40 via put warrants

This Monday, as part of our section dedicated to derivatives, we are selecting products on the French Cac 40 stock market index, on which we recommend the implementation of a hedging strategy.

Inflation sets records, both in the euro zone, where it reached 8.6% last month, and in the United States. A surge in prices that pushes central banks around the world to carry out monetary tightening, in particular the European Central Bank (ECB) which will raise its key rates by 25 basis points in July and then in September.

These are all elements that make some experts fear a major economic contraction in the coming months, while the half-year results expected in July, particularly for Cac 40 companies, could mark the first impacts of the economic uncertainty that reign. In this context, equity market operators are adopting a cautious attitude, because the probability of a market decline is increasing day by day.

Consequently, in order to hedge our portfolio, we are selecting put warrants code SK14C, maturing on December 16. Their exercise price is 6,200 points, for a leverage of -6.8 times.

Quotation range: 2.5 – 2.51 euros.