2024 is an election year, meaning the chances of volatility playing a significant role in our portfolios over the next 8-10 months are high.
What is Volatility?
According to Investopedia, the simplest definition of volatility is, “A reflection of the degree to which price moves.” When the prices of equities move rapidly in either direction, volatility is present in the market.
What Does Volatility Mean for Your Retirement Account?
Volatility may not be good for your blood pressure or mental health, but there are opportunities in every volatile market. While the market going down 10% and then up 10% may not change your balance, an increase in volatility is good for options and covered calls.
A covered call is when you sell call options of a security while holding as much as or more than that amount of the security. This strategy can generate an additional income stream during a volatile market while keeping your long-term holdings intact. This strategy involves risk, but may be worth exploring.
Speak to your financial advisor before implementing this strategy to take advantage of an up and down market.
What questions do you have about the upcoming year, the stock market, or your retirement account? Ask us, and we’ll answer during the upcoming BTWM Virtual Lunch Webinar on 2/8 at noon. Learn more about our upcoming webinar here.