Portfolio insurance is structurally equivalent to buying a put option on the portfolio.

Evidence

A floor below which the value of an asset cannot fall is, in effect, a put option on the asset: an option to sell the asset at the guaranteed price level. In principle, therefore, the value of a portfolio can be insured by buying a put on the portfolio with a strike price equal to the desired floor. — Donald MacKenzie, An Engine, Not a Camera, 791

Categorization

• XREF: connects to: Arbitrage linking futures prices to the index enabled portfolio insurance via cheap futures trading. — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 801; The option pricing approach extended to valuing securities that only resembled options — Donald MacKenzie, An Engine, Not a Camera: How Financial…, 142; Portfolio diversification and hedging are the two basic private risk-management techniques — Mark Blyth, Austerity: The History of a Dangerous…, 101

Broader Connections

• Arbitrage linking futures prices to the index enabled portfolio insurance via cheap futures trading. #expands (0.85) — Donald MacKenzie, An Engine, Not a Camera, 801
• The option pricing approach extended to valuing securities that only resembled options #expands (0.75) — Donald MacKenzie, An Engine, Not a Camera, 142
• Portfolio diversification and hedging are the two basic private risk-management techniques #expands (0.70) — Mark Blyth, Austerity, 101