Although the inventory market seems poised to proceed its rally to document highs , merchants can use choices to shield their positions from pullbacks and even a potential downturn, KKM Financial CEO Jeff Kilburg stated. “You can sleep now for the next three months if you own these puts, no matter what happens overnight or what curveball comes at us,” Kilburg stated Wednesday in an interview on CNBC’s “Power Lunch.” An possibility is a monetary instrument that bases its worth off the worth of its underlying securities akin to shares. It supplies merchants the appropriate to purchase or promote an asset at a pre-agreed worth by a specific date. Kilburg defined how to use put and name choices to mitigate threat. He stated he offered Dec. 31 $700 calls on the SPDR S & P 500 ETF (SPY) and acquired the Dec. 31 $640 put. This means he anticipates that the market will not go up one other 5% earlier than New Year’s Eve, he defined. The SPY ETF closed Wednesday at $673.11. His funding recommendation got here as shares rallied Wednesday to all-time highs , regardless of U.S. lawmakers’ newest failure to move a funding measure that will permit the federal authorities to reopen. The S & P 500 added 0.6% on Wednesday, whereas the tech-heavy Nasdaq Composite jumped 1.1%. The Dow Jones Industrial Average ended the day close to the flatline, falling by simply 1 level. As the market continues to achieve momentum, volatility is low, making choices premiums cheap, in accordance to Kilburg. That’s why it’s an opportune time to purchase places, he defined. “If you think the market’s going to build up higher, which it easily could on this sugar high … you’re not going to want to sell in capital limit,” Kilburg stated. He added that shares might dip as buyers digest new monetary info from corporations throughout earnings season, which begins subsequent week. “Earnings season is coming, so that’s going to be important because if companies start talking down expectations, you could see cash coming out,” Kilburg stated.