What Trades to take if you are Bearish — Part2
Yesterday we discussed how to use SLBM to go bearish on a stock. Due to its complexity, most traders refrain from using that method.
A simpler approach would be to use the option strategy called Bear Put Spread.
Let us take the example of ICICI Bank again. The current price is Rs1077. We BUY a Rs1080 PUT strike and simultaneously SELL the Rs1070 PUT.
The Risk Payoff Graph is as shown.
The maximum profits will be: Rs3920
The maximum loss will be: Rs3080
Breakeven price: Rs1075.6
The maximum time duration of this strategy is till 25th April 2025, meaning your position has to make a decisive move within this period.
Most importantly, the decision to go “SHORT” has to be the outcome of your research and not a guesswork. Options trading is not gambling but the use of mathematics in the right way.
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