Just a curious idea after reading the Eureka report - The price of protection, wondering if this would work and earn a stable income higher than interests with little risk. I personally think hedging against your portfolio is a stupid thing and it kills all potential capital growth. But looking at dividend point of view, it seems to me that doing this on income shares might have benefits.
Lets say I buy TLS shares at $3 each and earning dividend at approx 9% a year. Then I take a hedge against TLS or telecom index 1 to 1, so any falling of TLS price would be protected. Now that the movement of TLS no longer matters and assuming dividend stays the same in years to come. Easy profit?
What are your thoughts?
benefiting from high dividend
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