Welcome to the Extreme Investor Network, where we provide expert insights and strategies to help you navigate the world of investing. In today’s market update, we saw a sharp setback in the rally of stocks in 2024 as the major averages took a tumble. However, there are strategies that offer investors portfolio protection and income to soften the blow.
While the major averages dropped more than 1% at their session lows on Tuesday, energy and utilities were the only groups that saw a rise within the S & P 500. Despite this setback, stocks have had a strong start to the year, with the S & P 500 climbing 10.2% in the first quarter.
One effective strategy to help mitigate equity risk and safeguard against potential downturns is incorporating options into your portfolio. Ashton Lawrence, a certified financial planner and senior wealth advisor at Mariner Wealth Advisors, recommends options as a complement to a diversified portfolio.
Trailing stop losses are a popular strategy for investors who want to hold onto high-performing stocks while protecting against sharp declines. This strategy allows investors to set a sell order based on a specified percentage decline from the peak value of the stock, rather than a set dollar price.
For investors looking to generate income while uncertain about market entry points, cash-secured puts offer a unique opportunity. By writing put options and keeping enough cash on hand to purchase the stock if the put gets exercised, investors can collect income and potentially buy the stock at a lower price in case of a downturn.
Another effective strategy is covered calls, which involve selling call options on stocks you already own. This can generate income from premiums while potentially limiting upside potential on the stock.
As you explore these options strategies, it’s important to consider working with a financial advisor to understand how these tactics may fit within your portfolio and help you meet your financial goals. Stay tuned to Extreme Investor Network for more expert insights and strategies to help you navigate the world of investing.
