Shah uses put options to protect against FTSE falls

Fidelity's Sanjeev Shah has been able to limit the downside on his £3.12bn Special Situations fund during the strong stock falls over the past month by using put options on the market.

Shah bought the options two months ago on the belief the market appeared overvalued. He funded the move by selling call options higher up the market. The manager removed 40% of the protection position last week, as the FTSE continued to slide from its April high of more than 5,800 to under 5,000 on Friday. “With the Ucits III powers I am able to adopt certain strategies that protect the fund at certain points in time,” Shah, speaking at the 2010 Fidelity FundsNetwork Investment Forum, said.  “About two or three months ago I started becoming cautious on the market overall. It was ...