Note that this strategy can be bought from most financial producers as a structured note. However, structured notes have acquired a bad name because these commercial products are often bundled with toxic elements and prohibitive terms and fees. However, the underlying compulsion to buy these products is still an indicator of the power of loss aversion and the need for some participation on the upside.
The last technique is the use of derivative collar strategies. In these portfolios, derivatives are used to structure floors and ceilings. For example, a collared portfolio may have a maximum return of 18% and a maximum loss of 6%. However, when the volatility measures are impounded in the returns, it can easily be seen that the Sharpe ratios in collared portfolios easily dominate the same ratios as portfolios that have been conventionally structured. Hopefully, the advanced planners of tomorrow will use such techniques as a nation's money managers set out to find these new horizons in loss management.