It’s Time to Hedge. This Bet Wins Whether Stocks Rise or Fall.

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Powell is right: Risk management pays. This options strategy works if stocks rise—and also if they fall.

They often acknowledge the moment in a way that demonstrates their mastery of events and never reveal much of anything that might benefit anyone who is engaged in the great game of skill and luck known as investing.

In reality, Powell did little to settle Wall Street’s interest-rate debate or to indicate if he thought the U.S. economy might slip into a recession that could impact the world economy more than China’s economic sclerosis. Many investors are pursuing something quite different from risk management. They are addicted to the illusion of quickly and effortlessly making money. The popularity of zero-dated options, which has made extremely short-term gambling a permanent and prominent market fact, reinforces the addictiveness of speculative trades that win big or lose a little. These quick-to-expire options are like financial fentanyl.

Rather than committing to a bullish or bearish direction, a Powell-like strategy that could prove profitable whether stocks rally or sink seems better.

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