I’ve submitted no less than three requests for enlightening content to the clever elves working in my idea factory this morning. And those schmucks have yet to deliver. So I’m resorting to sharing another one of my trading tricks. I already divulged one of them in the weekend Options Report so take a peek if you haven’t already.

Today’s tactic helps modify your mindset when the bears come to town. Primarily it helps to capitalize on rare opportunities that only arise during massive sell-offs. Here’s the gist of the idea:

First, pick the price that you’d love to scoop up shares of your favorite company at.

Second, decide the level of compensation you require to be willing to obligate yourself to buy at that stock price.

Third, place a sell limit order for a put option at said strike and price and root for the stock to sell-off enough to trigger your order.

Let’s use Advanced Micro Devices Inc to illustrate. Despite residing in one of the best sectors on the planet (semiconductors, see SMH), AMD dared to disappoint the Street during its last earnings release. And what, pray tell, did AMD say?

I have no clue. I’m a technician, remember? But it doesn’t take a genius to discern the denizens of the Street were in an uproar after the release – the stock is down 24% over the last four trading sessions. That’s one-fourth of its value gone, JUST LIKE THAT! Lest you were unaware, AMD is a momentum darling fawned over by options sellers of all stripes. Its depressed price tag keeps the capital cost minimal for trades like naked puts. And its excessive volatility keeps option premiums juiced which means handsome pay-days await for those willing to stick their neck out and sell puts or calls.

From a technical standpoint, AMD shattered multiple support levels during the dive. Perhaps most worrisome is the breaking of the 200-day moving average which hadn’t happened once during its two-year meteoric rise. Suppose you’re a willing buyer of AMD at lower prices. It sounds like just the time to “pick your spot and pray for pain.” Or, really, more pain.

Would you be a willing buyer at $9? Do you require 25 cents per contract as compensation for that obligation? If so, then input a limit order to sell the Dec $9 put for 25 cents. Currently, that put is trading for a mere 13 cents, so it will take another $1 drop in the stock to get there, but isn’t that the whole point of the exercise? Pull out the pom-poms and root for another sell-off to take the stock lower.

If the stock falls enough to enable you to sell the $9 put for 25 cents then, hurray! You made the market come to you, and you set the terms. If AMD doesn’t fall enough to get you filled, then who cares?

If you want to increase your chance of getting filled, you could change the strike to the Dec $10 put or maybe ask for a small credit (say, 20 cents instead of 25).  Now, if you really want to embrace the odds then use today’s tactic and the scaling-in technique explored in the Options Report. Pretty soon you’ll be capitalizing on volatility like a pro!