What is the market's current perception of the risk, and should the position be hedged or reduced?

Market perception of risk

The Pomerantz investigation adds a fresh, material‑legal head‑wind for J.M. Smucker (SJM). The –60 sentiment score and the fact that the alert is being broadcast to investors signal that the market now views the stock as higher‑risk than before – a “red‑flag” event that typically triggers a risk‑off bias. In the past 24‑48 hours the ticker has already opened lower on the news, with the daily chart still holding above its 20‑day SMA but testing the $115‑$118 support band on higher‑than‑average volume. The price‑action suggests the downside is still being priced in, while the broader market (S&P 500) remains neutral, meaning the negative catalyst is largely company‑specific.

Actionable positioning

Given the elevated legal risk and the early price weakness, the prudent approach is to reduce or hedge the existing exposure rather than hold a pure long position. For a modest long stake, a protective collar—buying a near‑term out‑of‑the‑money put (e.g., $115 strike) and simultaneously selling a higher‑strike call (e.g., $120) – caps downside while still allowing upside if the issue is resolved without material impact. If the position is sizable or the risk tolerance is low, a straight put purchase or a stop‑loss order just below the current support (≈$114) would be appropriate. In short, the market now prices SJM as a risk‑laden stock; trimming the position or adding a hedge aligns the portfolio with that perception.