Options May Protect Stocks Should Fed Tighten, Macro Risk Says

(Bloomberg) -- Investors should buy U.S. stock options to hedge against losses when the Federal Reserve starts reducing stimulus, Macro Risk Advisors LLC said. Buying bullish and bearish options on the Standard & Poor’s 500 Index with the same exercise price and maturity may preserve gains in equities, according to Dean Curnutt, president of the New York-based firm that advises institutions on derivatives strategy. So-called straddle trades profit when swings in the price of an underlying security or index increase.

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