just to share ideas, what about buying OTM puts as insurance for a market crash/correction?
for example, if you want to "insure" a nearly 100% increase in COP in 18 months (and an effective dividend yield of nearly 7%) you could buy jan 2013 $50 puts @ $2.40, this would buy you some ($50 put is only 2/3 ITM) protection until jan 2013 against capital loss and would protect a 7% dividend yield by sacrificing 3% return (1.5%/year) (maybe i should say sacrificing 6% return i.e. $2.40/$37.50 = cost basis, still only 3% per year)
another example, if you want to "insure" a nearly 70% increase in LUK in 18 months, you could buy jan 2012 $25 puts @ $0.90, this would buy you some ($25 put is only 3/4 ITM) protection until jan 2012 against capital loss by sacrificing 3% return.
looks like this is kind of what fairfax is doing, only they use the index to hedge....
any observations would be very welcome....
regards
rijk