CYA - Post-Modern Portfolio Theory: Are Put Options More Useful Than Bonds?

• The main idea behind modern portfolio theory is to maximize your expected return per unit of risk taken.
• Critics sometimes dislike this approach, arguing that due to the amount of leverage in the system, market crashes are far more common than would be expected by random chance.
• Some high-profile investors, like Paul Tudor Jones, Nassim Nicholas Taleb, and Taleb's former NYU student, Mark Spitznagel, have gotten rich from buying cheap put options that profit from a market crash.
• Is buying OTM puts now cheaper and more effective than putting money in bonds? Some investors think so.
• Some notes on game theory and ETFs to implement this strategy.

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