“It’s hard to predict the exact fallout,” said Asher Rogovy, chief investment officer at Magnifina, a New York-based investment advisor.
“If it’s not too late, investors should consider hedging their stock market risk with options. An outright default is predicted to be a disaster for the market, and even the typical brinksmanship could significant volatility. Overexposed investors could consider hedging with put options on vulnerable stocks or indices. It’s hard to predict the exact fallout, however. Another strategy is to buy call options on volatility-related instruments like VIX futures. As will all option trades, spreads may reduce the cost or risk. Also options are highly speculative trades and are not suitable for many investors.”