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For the Bearish investor, this strategy is favorable since they prefer this to selling on a not very long stock. Naked Call In the market, short calls are taken as a bearish market while short puts indicate a bullish market. This has a risk for the bearish investor and should be used with extreme caution. By selling calls or purchase options without having an underlying stock, you hope that the stock will maintain or decrease in value. That is why it is called “naked”, because there is no type of coverage and, if the stock increases in value, the risk of loss is unlimited. In the bearish market, it would be necessary to protect capital.
Put Back Spread It is used by investors who expect large ID Number List downward moves in volatile stocks. a put option with a high strike price and buying more puts at lower strike prices. It combines short puts and long puts and is built to have unlimited profits and limited losses depending on how it is structured. . Bear Call Spread Bear Spread means that the investor expects a bearish market and therefore are low reward strategies. It is achieved by selling call options at a specific strike price while buying the same number of call options at a higher strike price.
The maximum profit that can be obtained using this strategy is the difference between what is paid in the short put and what is achieved in the long call. Bear Put Spread It is a type of options strategy used when a decrease in the price of the underlying asset is expected. Bear Put Spread is achieved by purchasing puts at a specific strike price, while selling the same number of puts at a lower strike price. The maximum profit obtained with this strategy is equal to the difference between the two strike prices minus the net cost of the options.
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