Constant proportion portfolio insurance (
CPPI) is a
trading strategy that allows an investor to maintain an exposure to the upside potential of a risky asset while providing a
capital guarantee against downside risk. The outcome of the CPPI strategy is somewhat similar to that of buying a
call option, but does not use option contracts. Thus CPPI is sometimes referred to as a
convex strategy, as opposed to a "concave strategy" like
constant mix.