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Just buy SPY with 95% of your money and then allocate 5% to put options on the losers. if they don’t work out, it was just a hedge. if it did, you had your cake and ate it too.

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> allocate 5% to put options on the losers

How do you do it withing the frame I described the problem (cost effectively and without increasing risk) for relatively small investor?

In terms of making it a fund, I don't see how it can done effectively. But if you're an individual investor that knows what you're doing (ie have experience with options, etc), it's fairly straightforward to just allocate 5% of your portfolio to liquid long-dated put options.

There's still some complication here. Do you carry options to expiry or trade them before if their value skyrockets? How often do you rebalance?

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