Using derivatives during market crash

[Damien]

Noted! Firstly, thanks for the replies. Leverage is a double-edged sword. Slowing loading my bullets as the current market lacks buying opportunities except the recent O&G drop & small/mid caps.

[specuvestor]

I think VBs here have explained it well

Just to add
1) when you use options or futures to hedge you are reducing the net position of your portfolio but increasing the gross position. In my own experience unless you think the decline is very short term or temporary, reducing net is usually not as effective as reducing gross because the basis risk mismatch can be quite huge. The delusion of low net is low risk leads to many spectacular downfalls from LTCM to London Whale but risk managers and money managers still dont seem to get it.

2) options are leveraged instruments that you can almost synthetically create with low cost margins on stock positions

3) the biggest killer for equities investment is specific timing risk, including being forced to square your long or short positions. If someone is looking to invest in order to make money for his wedding next year, it's going to be a bad idea because in short term it is very difficult to say whether he will make money when he is forced to liquidate before a specific date ie wedding date. Options have the same problem ie maturity date