How to Use Options Trading Strategies to Make Money in a Bear Market
Did you know that you can implement several options trading strategies that can earn you a monthly income even in a bear market? Many people are surprised to hear that they don’t have to sit on the sidelines in a stock market that is spiraling downwards. Education and proper discipline using bear market options trading strategies will put extra cash in your pockets and give you the edge when the next bull market occurs. Here is a simple low risk trading strategy that you can implement when the market is trending down.
Trading deep in the money puts is one of many options trading strategies that can be implemented in a bear market. It is very easy to implement once you have completed your due diligence. This strategy only requires a few hundred dollars upfront and an online discount broker to start.
The first step is to identify a stock that you believe will continue to head lower in the next 4 to 6 months. Then you investigate several put option contracts that have a strike price well above the current share price of the security. After you have identified potential put contracts, you place a buy to open limit order with your online discount stock broker.
Once you have purchased your put contract(s), immediately place a sell to close limit order with your online broker. The limit order should reflect your overall options trading goals. Some investors may require a $1 increase in the price of the put contract before selling, while others may decide to sell after reaching a certain percentage gain. Your exit strategy should be included with your options trading strategies goals. You may also want to place a stop loss order to minimize your exposure if the underlying security begins an upward trend.
Trading deep in the money put contracts is just one way to implement an options trading strategy for a struggling market and economy. Are you ready to trade what the market gives you instead of losing money trading against the market?