KUALA LUMPUR, April 4 (Bernama) -- Bursa Malaysia closed lower today, with the benchmark index falling by 0.97 per cent, as persistent selling across various sectors weighed on the market, which continued to feel the impact of sweeping US tariffs. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) dipped 14.77 points to 1,504.14 from Thursday’s close of 1,518.91. The benchmark index opened 9.90 points easier at 1,509.01 and fluctuated between 1,500.90 and 1,515.74 throughout the day. In the broader market, losers thumped gainers 777 to 185, while 366 counters were unchanged, 1,031 counters untraded and 19 others suspended. Turnover fell to 1.81 billion units valued at RM1.89 billion against Thursday’s 2.51 billion units valued at RM1.81 billion.
As markets brace for Trump’s April 2 tariff announcement, investors are navigating elevated volatility, weakening sentiment, and fears of a broader trade war. With the S&P 500 down 5% in Q1—the worst start to a year since 2020—and Tesla and Nvidia sliding 36% and 20% respectively, the stakes are high.
Experts expect more downside risk leading into earnings season, and option strategies offer timely protection for investors caught in the crosswinds of tariff uncertainty.
3 Key Option Strategies to Hedge Tariff-Induced Volatility
1. Covered Call: Generate Income on Weak Recoveries
Ideal if:
✅ You own the stock
✅ You expect it to stay flat or recover slowly
How it works:
Sell a call option on your existing stock (e.g., far out-of-the-money).
Earn premium income while waiting for the rebound.
Example: If you hold Tesla (TSLA), sell a call at a strike price well above current levels. You keep the premium even if the stock doesn’t move much.
🟢 Benefit: Generates income while holding depreciated assets
🔴 Tradeoff: Caps upside if stock unexpectedly rallies
2. Protective Put: Classic Hedge for More Downside Risk
Ideal if:
✅ You own the stock
✅ You fear further sharp declines
How it works:
Buy a put option to lock in a minimum selling price.
Keeps the upside open while limiting losses.
Example: Buy a put option on Nvidia (NVDA) with a strike close to current trading levels to shield against a deeper sell-off.
🟢 Benefit: Limits downside loss, retains unlimited upside
🔴 Tradeoff: Requires paying a premium upfront
3. Bear Put Spread: Cost-Efficient Hedge on Moderate Declines
Ideal if:
✅ You expect a stock to fall further
✅ But not drastically
How it works:
Buy a higher-strike put
Sell a lower-strike put
Example (Tesla):
Buy a $250 strike put
Sell a $240 strike put
Max Loss: $285 (if TSLA stays above $250)
Max Gain: $715 (if TSLA drops below $240)
🟢 Benefit: Reduces hedging costs
🔴 Tradeoff: Capped profit potential
Final Takeaway
With consumer confidence plunging to a 4-year low and tariff escalation risks rising, hedging through options may be the best strategy to protect portfolios, manage risk, and navigate volatility as "Liberation Day" nears.
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