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Thursday, November 20, 2008

Bearish Strategies - BEAR SPREAD: Using Puts


When to use: 

When you are bearish on market direction.

A Put Bear Spread has the same payoff as the Call Bear Spread as both strategies hope for a decrease in market prices. The choice as to which spread to use, however, comes down to risk/reward.

A good tip is to compare the market prices of both spreads to determine which has the better payoff for you.

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