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Mark Hulbert: How to protect your money from this stock market’s wild volatility

There’s a surprisingly easy and profitable trading strategy to use during extraordinary stock-market volatility like now.

There have been six trading sessions over the past three weeks in which the Dow Jones Industrial Average DJIA, +0.82% suffered a triple-digit loss — including Monday of this week when the U.S. market benchmark shed more than 600 points. Then, on Tuesday, it jumped by more than 200 points.

The way for an investor to respond to such volatility is also simple: Whenever the market’s volatility jumps, hedge your stock holdings. This can be done either by building up cash or using derivatives such as put options.

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