Ep. 305 Protect Your AI Bets From Destruction: Why Hedging Matters For All Traders

This interview podcast focuses on investment strategies for mitigating risk in a volatile market. The host and guest discuss the significant market drop on Monday, January 27th, 2025, triggered by news about DeepSeek AI, analyzing the impact on specific stocks like NVIDIA. The guest, a CEO with market-making experience, advocates for using options, specifically puts, as a hedging strategy against sudden market downturns, particularly when stocks are "extended" (significantly above their 50-day moving average). He suggests buying puts 10% out of the money and 2-3 weeks out to manage risk without sacrificing all potential upside. The discussion also covers portfolio construction, risk tolerance, and navigating earnings season.