Bearish options strategies

Bearish options trading strategy will have greater gain in
the a falling markets. Investments using this strategy is not
suitable for a rising market.

Below are the list of bearish option strategies:

LONG PUT
For aggressive investors who have a strong feeling that a
particular stock is about to move lower, long puts are an
excellent low risk, high reward strategy. Rather than opening
yourself to enormous risk of short selling stock, you could
buy puts (the right to sell the stock). While risk is limited
to the initial investment, the profit potential is unlimited.

NAKED PUT
Selling naked calls is a very risky strategy which should be
utilized with extreme caution. By selling calls without owning
the underlying stock, you collect the option premium and hope
the stock either stays steady or declines in value. If the stock
increases in value this strategy has unlimited risk.

PUT BACKSPREAD
For aggressive investors who expect big downward moves in
already volatile stocks, backspreads are great strategies.
The trade itself involves selling a put at a higher strike and
buying a greater number of puts at a lower strike price.
As the stock price moves lower, the profit potential is unlimited.

BEAR CALL SPREAD
For investors who maintain a generally negative feeling about
a stock, bear spreads are a nice low risk, low reward strategies.
This trade involves selling a lower strike call, usually at or near
the current stock price, and buying a higher strike,
out-of-the-money call. This spread profits when the stock price
decreases and both calls expire worthless.

BEAR PUT SPREAD
For investors who maintain a generally negative feeling about a
stock, bear spreads are another nice low risk, low reward strategy.
This trade involves buying a put at a higher strike and selling
another put at a lower strike. Like bear call spreads, bear put
spreads profit when the price of the underlying stock decreases.

Neutral strategies will be discussed in the next post...