Manage These Option Portfolio Risks ASAP, Replace Stock in Your IRA and Keep the Risk of Recession in Mind

A weekly roundup of tastylive videos offers the best trading tips from the network’s wealth of financial shows

• Manage the four biggest risks to your portfolio with these simple approaches.
• Here are tastylive’s favorite strategies for IRAs.
• Have we reached the end of the story (stocks)?
• Don’t let the rally fool you. The last time this happened, volatility spiked. 

Four easy ways to manage your options portfolio in 2024

In the world of investing, managing your portfolio takes center stage. In fact, tastylive’s 2024 live events will emphasize the vital role of building a well-rounded portfolio. The stock market has been on fire with impressive growth across major indices, especially the NASDAQ, which soared by over 53%. But amid this excitement, it's crucial to keep an eye on potential risks to your portfolio. This segment with investment guru Tom Sosnoff points out four key risks—directional, correlation, buying power reduction and capital efficiency, including tail risk. Managing these risks is key to protecting your profits.

Sosnoff highlights two powerful strategies: beta-weighting and diversification. Beta-weighting simplifies managing positions by tying them to the S&P 500. Diversification, or spreading your investments across various assets, helps mitigate the danger of correlation risk. To tackle the uncertainty of tail risk, traders are advised to shrink their positions, use strategies that define risk and consider longer-term investments. These moves act as a buffer against unexpected major market swings, safeguarding your portfolio from abrupt changes.

If you’re about to retire, stop buying stock. Use these strategies instead. 

Mike Butler and Nick Battista made a video on trading options in individual retirement accounts—better known as IRAs. Trading options within an IRA account can offer more efficiency compared to trading stocks because of substantially lower capital requirements. Stock alternatives like zebras, poor man's covered calls and out-of-the-money diagonal spreads are particularly valuable options strategies for long-term stock investors looking to integrate options strategies into their IRAs. These alternatives offer leverage and the risk is similar to or lower than buying stocks directly. It's a diverse toolbox within an IRA, providing options beyond conventional stock trading, making it a versatile choice for investors.

Tom Sosnoff and Dylan Ratigan predict the end of story stocks

Financial markets are typically known for their rationality. The massive scale of transactions on public markets should theoretically dramatically increase efficiency … yet the largest gains in the S&P500 the past 12 months are all centered on the AI story. While a story can be fun, it is often the antithesis to efficiency. What can bring transparency, accountability, and efficiency back to markets? This week on the Truth or Skepticism program, Tom Sosnoff and Dylan Ratigan discuss the nature of facts, fiction and efficiency. 

Time to sell stocks as global recession strikes in 2024? 

Ilya Spivak has said it before and he’ll say it again: The global economy is facing a potential recession. The economic data, particularly the purchasing managers’ index (PMI) numbers from major economies like China, the United States and the Euro Zone, are showing signs of contraction and slowdown. This suggests global growth is not only bad but getting worse, making it increasingly difficult to escape a global recession.

Market reality and economic reality are disconnected. Despite the bleak economic data, the stock market continues to rally, with the MSCI All Country World Index Exchange-Traded Fund on pace to be up nearly 20% for the year. This disconnect is driven by market expectations of rate cuts by central banks, particularly the U.S. Federal Reserve. The market is focused on short-term cheaper money and is ignoring signs of economic weakness.

Perhaps most importantly for traders, volatility may be on the horizon. Historical patterns show significant rate hike cycles are often followed by increased market volatility after a lag of about two years. The current rate hike cycle puts us right on time for another potential volatility spike. This suggests the market's detachment from economic fundamentals may not be sustainable, and a correction could be imminent.

Eric Villa is a YouTube specialist at tastylive. 

For live daily programming, market news and commentary, visit tastylive or the YouTube channels tastylive (for options traders), and tastyliveTrending for stocks, futures, forex & macro.

Trade with a better broker, open a tastytrade account today. tastylive, Inc. and tastytrade, Inc. are separate but affiliated companies.