Many folks have made a fortune with Bitcoin, NVDA, PLTR etc. Those who have the ability to see with some clarity as to what will happen to these risky assets are very fortunate. People like me heavily rely on youtubers and reddit content to get a sense of how things are going for any of these risky assets, and what are the potential risks.
BTC falling by 80% has happened quite a few times in the past. Stocks like AMZN have also fell like that in the past. At least, with stocks, you know that valuation is high so the potential downside is very high. But with Bitcoin, we don't even know what can trigger a massive selloff other than the well known speculations like MSTR dying etc.
Following are the only few ways to manage risks.
1. Buying leaps. They will be extremely expensive for risky assets. So part of the unrealized gain will be lost in protecting the asset which is a bit ironic :)
2. Sell covered calls. Some of these stocks are well known to skyrocket within a short period of time. With covered calls, all the major upside will be lost if the stock really takes off like never before. A bunch of idiots on Youtube kept yelling "overvalued ... overvalued" when NVDA was at $400 presplit. I sold all my 100 shares fearing that it will crash like Cisco did around the year 2000. I bet the covered call sellers would also have regretted that move quite a bit.
3. Simply exit the position, or at least take some profit and continue with reduced risk. Sadly, a good chunk of upside will be lost if it indeed manages to go up in the "long run." :)
Stocks like GOOGL are relatively less risky but BTC, PLTR etc are like landmines. They can explode anytime when lady luck steps on it, and it is making me very nervous day by day. We cannot have the cake and eat it too. Something's gotta give. Nevertheless I wanted to pick your brain as to how you manage your risk if you are hedging your portfolio in some way. Would really appreciate it if you can share some ideas.