Tackle Today: Bear Market tip #5: Use Options Selling Strategies
January 7, 2022
≈ ✈ Fly above the chop. ≈
Traders,
Coach Tyler here.
Today brings us to the fifth and final tip from our bear market playbook: Embrace options selling strategies.
These primarily include naked puts, bull puts, bear calls, and iron condors. The logic behind this idea is as two-fold. First, the higher volatility of bear markets increases option premiums. That makes them more expensive to buy but more lucrative to sell. Strategies like those listed above pay a better return than is usually available, and you’re able to go further out-of-the-money to create a wider profit range.
Second, the wider profit range essentially means you don’t have to worry about the day-to-day back and forth that accompanies market corrections. As a result, there’s no need for a tight stop loss and thus less risk of getting whipped out during volatile conditions. I find selling options particularly tempting when stock prices reach extremes. You can lean into oversold conditions by selling puts or lean into overbought markets by selling calls or call spreads. It’s a far better approach for me than trying to navigate the topsy-turvy daily turns.
Chart of the Day: Crude Oil Hits Six-Week High
Oil prices climbed to a new six-week high on Thursday. The surge benefits energy stocks and is no doubt one reason they’ve exhibited relative strength during the recent market turmoil.
Video of the day: Fundamental Focus: Dividend History Explained
Coach Greg explains what Dividend History is and how traders and investors can use this important fundamental concept.
Options Theory Blog
Options Greek Delta as Share Equivalency
This is part three of a three-part series on the options greek delta. Today we’re spotlighting how delta measures share equivalency.
Today’s line up
Traders Lounge 11 AM EST
Join the coaches in this live lounge, ask questions, discuss ideas or just sit back and listen to veteran traders discuss market conditions.
Cash Flow Club Replay
If you missed last night’s episode when Coach Greg Holmes talked about The biggest challenges with the current market or would like to watch it again, check it out here.
Halftime Report 12:30 PM EST
The Halftime Report starts at 12:30 EST and covers what news is driving the market, chart analysis from the movers and shakers of the day, and fun in a way that only Matt and Tim can deliver.
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