Bear Call Spread Strategy, What is Bear Spread Option?

The options portfolio trading strategy in the bear market is mainly analyzed from the perspective of buying and selling. **Call options and sell put options are the most basic strategies. In the meantime, we can also take a look at the rest of the strategies.

1.Vertical spread arbitrage strategy。This strategy is further subdivided into call options, bear spread options, put call options, bear spread options, and defensive bear spread options.

Let's talk about the former first, such a combination form is mainly in the case of a small bearish stock price in the expected bear market.

The specific combination is ** call options with a high strike price plus selling the same number of ** call options with the same expiration date and a lower strike price. The biggest loss in this combination is the difference between the two strike prices minus the net premium, and the maximum return is the net premium that can be obtained.

2.Bear market spread strategy. Let's talk about the characteristics of the latter.

This combination is generally moderate for a period of time in the future, and bear market spread options can be used to achieve low-cost profits. Such a strategy is also a take-profit and stop-loss strategy, and the benefits that investors can obtain in the bear market are very limited, but if **does not fall**, investors will not face too much loss. This specific combination consists of a ** put option with a higher strike price plus a ** put option with the same expiration date and a lower strike price to sell the same number of ** put options with the same expiration date.

3.Defensive bear spread optionsThe combination is generally in the sense that the future is more likely, and at the same time worried that there will be a situation in the future, the only thing that is certain is that the future target will not have a situation when the situation appears. This combination consists of selling a put option with a higher strike price and buying two put options with the same lower strike at the same time.

From the profit and loss chart of the option portfolio, we can see that the defensive bear market spread combination will get more returns as the underlying ** gets closer to 0, and at the same time, after the stock price **reaches a certain position, it will obtain a definite return, which is combined with the advantages of short put options. It can be seen that the defensive bear market spread combination has the characteristics of less risk and more stable returns.

4.Put Bands. Such a combination is that when an investor is very bearish on a certain **, he can use the put belt option to increase his exposure to the opposite risk in the underlying **.

Specifically, when it is used, put options with different premiums** exercise prices but the same expiration date are combined to use the higher cost of rights to obtain higher leverage. One of the biggest losses we suffered was the option premium spent. But the same maximum gains show a step-by-step ascent of gains.

Option bear market spread strategy: It refers to the investor** put option with a higher strike price and sell the same month put option with a lower strike price of the same number and lower strike price.

Buy High Strike Put + Sell Low Strike Put = Bear Market Spread Strategy.

First, the main application scenario: mild bearish

1. The bear market spread strategy involves a right and an obligation position, and at present, due to the launch of the exchange strategy margin, investors no longer have to occupy the funds outside the amount.

2. The bear market spread strategy can be composed of two put options or two call options. Operationally, it is also "buy high and sell low".

Bear Call Spread:

In the moderate ****, the decline is relatively large to the small or no rise. Strategy building: Sell call options near at-the-money, ** out-of-the-money call options with a higher strike price. The maximum return at maturity is lower and the risk is greater.

Bear Spread Spread:

In the moderate ****, the decline is relatively large. Strategy building: **Put options near the the-money, sell out-of-the-money put options with a lower strike price. The maximum return at maturity is higher and the risk is less.

2. Possible risks

1. The time between the two legs in the price difference combination should not be too long. If the investor is operating with one leg of the obligation position to be traded first, and the other leg is not traded, the other leg can be traded at a slightly worse price in time to avoid the exposure of risk exposure.

2. Margin is required to pay for selling option contracts, and the margin is adjusted daily with the underlying ** and options**, and it is necessary to pay attention to the market ** at any time in case the margin is insufficient and forced to close the position.

Bear spread options are an options trading strategy that is used to make gains when the market is bearish. It consists of two options, Huaisun is a put option to buy and a put to sell a lower strike price.

Specifically, the strategy of a bear spread option is to buy a put option with a lower strike price and sell a put option with a lower strike price, both with the same expiration date and the underlying asset. The purpose of this is to build a combination of differences by buying and selling options, so as to obtain gains in the market.

If the market ****, the lower strike put option will realize the value, and the higher put option may not realize the value. The put option with a lower strike price sold needs to be sold according to the agreement if the value is realized on the exercise date, and this ** may be lower than the market, so it may obtain a certain return.

The advantage of bear market spread options is that you can take advantage of the leverage effect of options trading to achieve larger returns with a smaller investment amount. However, it also carries certain risks, which can lead to losses if the market is ****. Therefore, when trading options, it is necessary to conduct sufficient analysis and judgment of the market and formulate appropriate risk control strategies.

No, you don't. The option spread strategy is a bear market futures balance rough weight strategy, through the simultaneous ** European call option and the same maturity, the same underlying asset European put option, in order to obtain the ****** income. Option spread strategies generally do not require margin payment.

The option spread strategy does not involve leverage, so the trader does not need to make an initial margin payment for the position of the Heyin Auction Contract. However, traders of the spread strategy need to have sufficient experience in options trading and financial strength, because they need to sell two options contracts at the same time, and the strategy may suffer varying degrees of losses under the influence of multiple factors such as changes in time value and fluctuations.

Final Profit (48-30)-2*(40-30)+(38-30)=$6.

The explanation is as follows: in fact, the purchase cost of a put option with a strike price of $48 and a strike price of $38 is a total of 8 yuan, and the premium obtained by two put options with a strike price of $40 is a total of $8 (the title should be $4 for each of **, if not for each is too cheap, the strike price of $38 is $2, and the strike price of $40 is only $4, that is, $2 each). In this way, the purchase and the income of ** are just offset by each other.

Therefore, the intrinsic value of each option at expiration is calculated to obtain the profit and loss of the portfolio.

To understand this sentence, we must first understand the meaning of options. Let's use an analogy to explain options, which is easy to understand:

For example, a certain ** 10 yuan stock on the same day, someone is optimistic about this **, thinking that it can rise to 12 yuan after 5 days, so the person contributes capital and reaches an agreement with the trading institution on the same day, agreeing that 5 days later, the stock will still be 10 yuan **. This agreement results in a trading right that can be exercised after 5 days, known as an option.

After 5 days, if the stock price is really **, then the person can exercise the right, that is, he can still pay 10 yuan**, so that the person can make a profit, and the trading institution loses. If the stock price falls instead, then the person can choose to give up the exercise, but if the person chooses to give up the exercise 5 days ago, the capital contribution will be lost, and the institution will make a profit.

The reverse is true for put options.

It doesn't really matter whether it's a bear market or a bull market. It's just that the bear market is prone to put options, and the bull market is more call.

Hopefully, you can understand that way.