Bearish Options Strategies
Learning how to make money in down markets is a critical component to your long-term success rate. The ability to profit when stocks are falling gives options traders a superior edge in the financial markets.
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Bear Put Backspread

A bear put backspread is a multi-leg, risk-defined, bearish strategy, with unlimited profit potential. A bear put backspread is purchased when an investor believes the underlying asset’s price will be below the long put strike prices at expiration.
Bear Put Backspread
Kirk Du Plessis
Apr 19, 2021

A bear put backspread is similar to a long put option as far as your outlook on the underlying stock (i.e. that you want it to go lower), but you use the sale and purchase of different ratios of options to protect against a possible move higher. These are often referred to as “ratio spreads” because you are buying and selling options at intervals of 1:2 or 2:3 etc. With this particular strategy, you would sell a put option and then buy 2 lower strike puts, which still makes you a net buyer of options at a ratio of 1:2.

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Call Broken Wing Butterfly
A call broken-wing butterfly spread is an advanced bearish option strategy with the goal of having no downside risk. Call broken-wing butterflies consist of buying one in-the-money long call, selling two out-of-the-money short calls, and buying one out-of-the-money long call above the short calls.

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