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Understand Bear Call and Bear Put spread
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Think like a professional trader and learn to execute Bear Call and Bear Put spread strategies to minimize losses in the worst case scenarios.
Understand Bear Call and Bear Put spread Professional traders value ‘risk visibility’ more than the profits. In simple words, it’s a much better deal to take on smaller profits as long as you know what would be your maximum loss under worst case scenarios. That's why traders use Bear call spread, a two-legged options trading strategy used when one’s market view is fairly bearish. Investors can earn options premium income with a lower degree of risk using a bear call spread strategy, as opposed to selling an uncovered call option. On the other hand, A bear put spread strategy is one employed by traders when they want to minimise losses while optimising profits. This is a strategy that comes in handy for a bearish market, when an investor is speculating that the price of a security is going down. It is essential to gauge the mood of the market before committing to this type of spread as it is best applied in certain specific situations. Let's understand in detail the basics of option strategies and how to use them on Smart Money by Angel Broking.