Something I've been considering but have been unable to find much advice on: If you are a buy and hold investor with a 20+ year investment horizon is it worthwhile to purchase protective puts? According to some research I found that the S&P500 has a 20% decline approximately once every 5 years or so. Let's say you are invested in SPY, currently trading at $186.63. A 20% drop would bring the price to about $149. To protect against this you buy a Mar 2017 $160 put at a cost of $9.77. This gives you a break even price of about $150, therefore if the market were to fall over 20% you would be covered. What I am struggling to understand is if this is something that would make sense with such a long investment window. 1) As this put is good for a year, and on average a correction of 20% happens every 5 years this works out to about $4885 spent on puts over 5 years. Therefore your payout from this put has to be greater than this just to break even, plus cover you for losses on your underlying holding. 2) Does investing that $4885 in the underlying instead over the course of the 5 years, (dollar cost averaging on a fixed schedule), give you a better return? 3) What if you are worried about an extreme black swan event. Is there sense in purchasing extremely OOTM put options for protection?