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Options Strategy For Bear Market

Discussion in 'Ask any question!' started by Baggi, May 25, 2020.

  1. Baggi

    Baggi Active Member

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    I've been convinced now for a month or so that we are going to be in a bear market over the next year.

    Obviously nobody ever knows what's going to happen in the markets, but I just can't see how we get out of this one. Maybe the markets will soar because we will spend a few hundred trillion trying to fix the economy and the inflation alone will keep the markets up.

    But, supposing that doesn't happen and things are much more bleak than we're seeing, I wanted to capitalize off of a large down move in the markets.

    But for the life of me I couldn't figure out what strategy I wanted to use. I'm expecting us to retest the bottom by election day in November, and move solidly down from there. So, what to do?

    In my experience, bear markets last for more than a year, but less than two years. This leads me to March expiration of 2021.

    Sell the deep in the money call option at .15 delta, 2200 SPX and buy the deep in the money call option at 2225. This will give me a credit of about $2,080 and my maximum loss is $420. Low risk, high reward.

    If anyone has a better strategy that would use less capital (And less buying power) with higher rewards, I'm all ears!
     
    OldFart likes this.
  2. riskov

    riskov New Member

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    it's been more than a month, what strategy have you chosen? did it justify itself?
     
  3. Baggi

    Baggi Active Member

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    Not sure what you mean. I posted that on Sunday, two days ago.

    And I haven't implemented it yet. I'm hoping for something better.
     
    OldFart likes this.
  4. bearwaffles

    bearwaffles New Member

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    Are you still bearish? Would like to discuss strategies with you!
     

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