Option Strategy For Upcoming Bear Market

Option strategy for upcoming bear market

Option Strategies for
Bull, Bear and Sideway Markets

Option is one of the most versatile trading instruments available.

Option Strategy for a Major Stock Market Crash in 2018! - Butterfly

There are various option strategies exist to cater to traders with different risk profile, type of personalities and amount of capital or time available.

Click here to ask a question or discuss in more detail on the various options trading strategies

Many new option traders are being attracted to buying option.

This is due to the fact that they are familiar with buying stock (or other assets such as buying a house).


They may also hear from their friends or brokers that buying option has limited risk and unlimited profit potential.

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However many of them did not know that selling options is also one of the ways to achieve a consistent profit.

So… what is the best stock option strategies? To have better trades, should you buy or sell options?

Option strategy for upcoming bear market

The quick answer is that sometime there are advantages to buy options and sometime selling options has its benefit. Which option strategies to apply will depend on your goals, your view on the underlying stocks and general market. Ideally, you should develop strategies for both buying and selling of options.

Before entering into an option contract, you should have a view on the underlying stock that you are going to invest. Is it bullish, bearish or will it going to move sideway?

Option strategy for upcoming bear market

As option has a fixed expiration date, you will also need to know when that move is possibly going to happen and how far the underlying stock might move. Therefore the option trading strategies employed has to take into account your judgement on the underlying stock’s direction, timing of movement and how volatile the movement will be.

Option strategy for upcoming bear market


The basic option strategies can be broken down into Long Call, Long Put, Short (Naked) Call and Short (Naked) Put. Once you have master the basic framework of these 4 option trading strategies, you will be able to better understand other more advances strategies.

Lets look at the various options strategies that can be applied to the general market direction

Bullish Strategies

1.

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Long Call
2. Short (Naked) Put
3. Covered Calls
4. Bull Call Spread
5. Bull Put Spread

Bearish Strategies

1.

Option strategy for upcoming bear market

Long Put
2. Short (Naked) Call
3.

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Covered Put
4. Bear Put Spread
5. Bear Call Spread

Volatility Strategies

1. Long Straddle
2. Long Strangle
3. Short Call Butterfly
4. Short Call Condor
5.

Final Words

Short Iron Butterfly
6. Short Iron Condor


Sideway Strategies

1. Short Straddle
2. Short Strangle
3. Long Call Butterfly
4. Long Call Condor
5. Long Iron Butterfly
6.

What Are Options and What Type of Options Are There?

Long Iron Condor

All of us come to the market with our own strengths and weaknesses. There are traders who are naturally bullish and some bearish; Some can monitor the market the whole day and some only look at it once a month (or longer); Some of us may be confident in trading in the long term while others believe in short term trading. Some of us may be terrified by the unlimited risk profile of certain strategies but others will succeed with the proper application of it.

The key is to find the winning option trading strategies that fit your strengths and avoid your weaknesses. Every trader has his own unique risk tolerance, personalities, amount of capital and time available.

Option Strategies For A Down Market

Therefore, apply the strategies that match your risk tolerance, investing style and confidence level.

Thoroughly understand yourself and apply the option strategies that can help to maximize your probabilities of success and limit the risk of losses.

Remember, the more knowledge you have about the market and yourself, the greater your chances of success.


Are Butterflies Giving You Nighmare?
How About Iron Condor or Straddles?

Use this space to discuss on any option strategies related topic.

Binary options vs stock trading

Ask a questions or share with other traders how a particular strategy fit into current market conditions.

Everyone is welcome and you can ask a question or comment on any topics that you are interested.

It's free, fun and easy to do! No registration is required! Join in!

What Other Traders Have Said

Click below to see contributions from other traders to this page...

Stock Market Trading Advice 
New can anyone help?

Option strategy for upcoming bear market

Bought Schaeffers and they about send me to the poor house. Comment on "Stock Market Trading Advice" TSO Reply: Hi Jed.

Sideway Market Not rated yet
I don't know how to define "sideway" and in which strategies we can lay them into sideway.

How do you use put options to profit from a bear market?

Thanks! Comment on "Sideway Market” TSO Reply: Hi …

Long Straddles - When to Enter Them Not rated yet
I have been doing option trading for a while and learned by experience, that one of the greatest threats to profitability, is option time decay. The worst …

Hedging a Short Straddle? Not rated yet
Instead of writing an uncovered call and put at the same strike, what if you were to do a buy-write call and a put at the same strike...

all at-the-money?

A differentiation strategy thrust option

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