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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Put Calendar Spread

A put calendar spread is a multi-leg, risk-defined strategy with unlimited profit potential. Put calendar spreads are neutral to bullish short-term and slightly bearish long-term.
Put Calendar Spread
Kirk Du Plessis
Apr 19, 2021

Long put calendar spreads profit from a slightly lower move down in the underlying stock in a given range. They also profit from a rise in implied volatility and are therefore a low-cost way of taking advantage of low implied volatility options. Calendar spreads lose if the underlying moves too far in either direction. The maximum loss is the debit paid, until the option you sold expires. After that, you are long an option and your remaining risk is the entire value of that option. Options in near-month expirations have more time decay than later months because they have a higher theta. The calendar spread profits from this difference in decay rates. This trade is best used when implied volatility is low and when there is an implied volatility "skew" between the months used, specifically when the near-month option sold has a higher implied volatility than the later-month option bought.

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Call Diagonal Spread
A call diagonal spread is a multi-leg, risk-defined, bearish strategy with limited profit potential. A call diagonal spread is entered when an investor believes the stock price will be neutral or bearish short-term.

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