Rs 8Cr corpus heavily in US Tech: How do I protect it from a 50% AI bubble crash?

You can protect your portfolio from a catastrophic crash by buying long-dated put options as insurance and building a strong cash reserve.

The most critical question for a large portfolio is how you protect it when the market turns against you. If the AI bubble pops and the market drops 50%, you want to ensure your portfolio does not suffer more than a 10-15% drawdown. This is achieved through strategic options hedging.

For example, if the US tech index is trading around $600, you can purchase long-dated put options, like a $545 strike price expiring in 2yr. If the market crashes to $300, this put option gives you the right to sell your shares at the predetermined price of $545. Buying these options might cost you roughly 4.5% of your portfolio in premiums.

To offset this cost, you can routinely sell covered calls and cash-secured puts to net out the expense over time. Options were originally designed as insurance, and smart investors use them strictly for risk mitigation rather than leverage.

If you do not want to use options, the simplest alternative strategy is to build a cash bucket. You can stop your SIPs for a month or two and raise your cash reserves to 20-25%. Keep that capital ready to deploy when the market inevitably corrects.

Disclaimer: All information shared above are strictly for educational and informational purposes only. It should not be construed as financial or investment advice.