Bearish Trading Strategy
Long Put
Short Call
Covered Put
Bear Call Spread
Bear Put Spread
Put Backspread
A bearish strategy is used when an options trader expects the price of an underlying stock to decrease
Long Put
Profit : Unlimited
Loss: Limited
A Long Put strategy is best used when you expect the underlying asset to fall significantly in a relatively short period of time. It would still benefit if you expect the underlying asset to fall gradually
Short Call
Profit : Limited
Loss: Unlimited
A trader shorts or writes a Call Option when he feels that underlying stock price is likely to go down. Selling Call Option is a strategy preferred for experienced traders.However this strategy is very risky in nature. If the stock rallies on the upside, your risk becomes potentially unquantifiable and unlimited.
Covered Put
Profit : Limited
Loss: Unlimited
Trader is neutral or moderately bearish in nature and wants to take advantage of the price fall in the near future. The trader will short one lot of stock future. Now the trader will short ATM Put Option, the option strike price will be his exit price. If the prices rally above the strike price, the Put Option will become ITM and will be squared off. If the prices stay below the strike price, then the trader will square off his Futures position and make money and also pocket the Put Option premium
Bear Call Spread
Profit : Limited
Loss: Limited
Bear Call Spread option trading strategy is used by a trader who is bearish in nature and expects the underlying asset to dip in the near future. This strategy includes buying of an ‘Out of the Money’ Call Option and selling one ‘In the Money’ Call Option of the same underlying asset and the same expiration date.
Bear Put Spread
Profit : Limited
Loss: Limited
Bear-Put-Spread involves buying of ITM Put Option and selling of an OTM Put Option. If prices fall, the ITM Put option starts making profits and the OTM Put option also adds to profit at a certain extent if the expiry price stays above the OTM strike.
Put Backspread
Profit : Unlimited
Loss: Limited
If the trader is bearish on market and bullish in volatility, he will implement this strategy. However the trader can be neutral in nature i.e. indifferent if the market moves in either of the direction, this strategy will make profits, but uptrend will give a capped income than downtrend which will give unlimited returns.In this trade you Sell 1 ITM Put Option and Buy 2 OTM Put Options
Analyse Risk
Stock Market investments are subject to market risk. Please read the offer documents carefully before investing. Past performances are no guarantee of future returns.Please consult your financial advisor before making any decision.