If you are an investor, risk is always on. How do you cover that risk. How you cover that risk is what we do at CoverRisk.com very well. But besides the plug, if risk is off then you lack two elements of risk, uncertainty and utility. Risk off means you have no risk and as such you are not an investor. A trader can have risk off or a flat position, but an investor has uncertainty and the utility of possible expected returns or even better, alpha, excess return. If we reduce an element of risk as to how we measure the utility it brings us, we have to look at in terms of money. Units of money and how it is applied to become a per unit risk (PUR) function. AAPL is a stock owned for various reasons and we need to cover risk when owning a unit of AAPL. We also have to look at the PUR in terms of time or in this case the investor's dimension of market time which is quantified as each end of day based on the closing price.
More to come.
