There is a whole lot of red on my screen today! Below is what the current markets look like. The S&P 500 (/ES) is down 1.31% . . . the Nasdaq (/NQ) is down 1.55%. It seem like whenever a day like this comes that people are calling for the end of the bull market.
While no one knows if that is a legitimate call or not (we will know in the coming months), there are a few things that people can do during a little sell like we are experiencing today.
1. Sell some puts. If you’re in need of income or if there are stocks that you really like that you are not yet in, consider selling some puts. We talk more about this strategy in our Finding Income in Today’s market video. Click here to see watch. With the rise in volatility and the bullish up-trending market pulling back (along with most stocks), today could be a great set up for this strategy.
2. Buy back any sold calls. Today is a great day to buy back any of those short calls with a March expiration. One strategy that we really like is selling short call verticals. (Click here to learn about that strategy). Today would be a perfect day to close those types of positions at what is hopefully a gain for the month of March.
3. Do nothing with your stocks. Remember this is just a blip on the radar. The worst thing you can do with stocks that you own is sell them just because the market is down. If the stock is an excellent company, with good management and is growing year over year, don’t let one bad day, or even multiple bad days in the market throw off your investing strategy.
4. Buy those stocks that you really want to own but don’t. If there are stocks that have gone up too far too fast in a way that makes them too expensive to buy, this may be an opportunity for you. You should have in mind a price that you would like to own a specific stock . . . when it hits that price buy it. If that is happening today . . . great!
Remember, don’t over react to what happens in the market. Have a game plan and implement it accordingly. Above all . . . don’t do anything that you’ll regret tomorrow.