Three Winning Options Trading Strategies Revealed

The majority of people lose money in a bear market. Do you recollect the tech bubble and recession in 2000-2002? Let’s talk about 3 option trading strategies that can make you huge income in a bear market or recession.

Options Trading  Tactic No. 1 – Buying Put Options
It is quite simple to buy put options. This option trading tactic can even be employed in an IRA account provided you have been approved by your broker. You desire to choose a stock, which you feel has a fine  chance of going down in price. Your danger will be narrowed to the price of the put option. For example, stock XYZ is at present trading at $50 per share and you buy a put option on XYZ with an ending date of two month later on with a hit price of $50. If the stock drops from $50 to $40, your put option would be worth $10 per share.

Option Trading Tactic No. 2 – Purchasing Bear Put Spread
Buying a put spread is a bit more complicated than just purchasing a put option but offers you the benefit of reducing your price but caps your income. A put spread is distinguished by the trading of two same month expiration put options, buying one at a certain strike price and vending the other put option at a hit price cheaper than the bought put option. You wish to pick a stock that you think will be falling in price. Your risk will be limited to the price of the put spread. As an a model, if we buy the put option as stated above but also sold a put option with a hit price of $45. In this example, should the stock plunge to $40, you would profit $5 per share ($50 strike price – $45 strike price). And while you are making less per share, your savings come in the fact that the cost of  buying the put option outright would be much higher than the primary cost for the bear put spread.

Options Trading Strategy No. 3 – Married Put
Risk can be minimized by utilizing a married put, which is a hedging strategy. This strategy includes buying a stock that you believe will be good in worth and buying a put option at the same time to minimize any losses owing to adverse market progress. You might have heard the proverb that there is always a bull market going on somewhere. To benefit from this strategy is to find out what business sectors and securities go against the grain and appreciate in a bear market. Next you buy the stocks you chose and defend your investment by purchasing a put option to minimize your losses if the stock goes south.

Finally, you can still earn big  income in bear markets by looking for stocks that you believe will fall in price and buying a put option or a bear put spread. Alternatively, you could purchase a married put on a stock in a sector you believe will appreciate, thus limiting your jeopardy. Along with  buying options on stocks, you can as well purchase put options on exchange traded funds or index options. Exchange traded funds let you to invest in global markets, properties and currencies. It is possible to get a huge profit in a bear market. However, it is important to realize the details of the option tactics,  choose the  correct stock, exchange traded fund or index option, and make use of a proven strategy and begin!!!.

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