Options aren’t just for generating income or making speculative trades – they’re powerful tools for protecting your portfolio against market uncertainty. Whether you’re navigating market downturns or seeking to safeguard gains, options can help you balance risk and reward while maintaining control over your investments.

Why Risk Management Matters

Every investor faces risk, but not all risks are created equal. Market volatility, sector-specific events, and macroeconomic changes can impact your portfolio in unpredictable ways. A proactive approach to risk management can:

• Protect your portfolio from significant losses.
• Provide peace of mind during turbulent markets.
• Position you for success in the long run.

Options offer the flexibility to hedge against these risks without drastically altering your overall strategy.

Three Strategies for Managing Risk with Options

Protective Puts

A protective put allows you to insure against losses on a stock or ETF. By purchasing a put, you gain the right to sell your holdings at a predetermined price, capping potential losses.

Example: You own 1,000 shares of a stock trading at $100. Buying a put with a $95 strike price ensures that, no matter how far the stock falls, you can sell it for $95 per share.

Benefit: Reduces downside risk while retaining the stock’s upside potential.

Options Overlays

An options overlay involves strategically adding options positions to your portfolio to enhance returns or mitigate risk without disrupting the underlying holdings.

Example: Selling covered calls on a portion of your portfolio can generate additional income while maintaining exposure to market growth.

Benefit: Balances protection and opportunity within your existing portfolio.

Collar Strategies

A collar strategy combines buying a protective put and selling a covered call to create a defined price range for your stock. This strategy limits both upside and downside risk, offering a conservative approach to risk management.

Example: If your stock is trading at $100, you might buy a put at $95 and sell a call at $105, locking in a $10 range.

Benefit: Provides structured protection while still generating some income.

Our Approach to Risk Management

At SteelPeak, we take risk seriously. Our team specializes in designing and implementing options strategies that align with your long-term goals, address your unique risk tolerance, and adapt to changing market conditions.

By integrating options into your portfolio, we help ensure that you’re prepared for whatever the market brings without sacrificing growth opportunities.

Is Your Portfolio Protected?

In a world where markets can change overnight, having a solid risk management plan isn’t optional, it’s essential. Options offer a flexible and effective way to safeguard your investments and secure your financial future.

Let's talk about how options might help in your situation.

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Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by SteelPeak to provide information on a topic that may be of interest. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Investing involves risk, including possible loss of principal. No strategy assures success or protects against loss. To determine what may be appropriate for you, consult with your attorney, accountant, financial or tax advisor prior to investing.