How To Play The Market To The Downside

How To Play The Market To The Downside
Strategy 1: 0:00
Strategy2: 4:15
How do you play the market to the downside? Can you make money in a market that is going down?
Yes, and here's how:
2 STRATEGIES TO DO THIS:
1) Shorting a stock.
- You can sell a stock right now even if you don't own it, and then buy it back later at a cheaper price.
You have a broker. Using AAPL as an example which is at $119.52 & we believe AAPL might go down again to $110. You want to sell AAPL, don't own it yet so you borrow shares from your broker.
Your broker lends you 100 shares of Apple, and you have to return them later on. They reserve funds from your account to make sure this happens
You can now do what you want with these shares, so you sell them.
Let's say after a few days, Apple drops to $110 you are buying back those share at $110. You make $9 per share, $900 total. You own 100 shares of AAPL again, and you return these to your broker, and he releases the hold on your funds.
2) You would buy a put option.
- Put means that you have the right to sell a stock at the strike price.
Using AAPL again, & its trading at around $119 and we believe that Apple will go down to $110.
We would buy a put for $1.80. Now, this put gives us the right to sell Apple for $119. If AAPL goes down to $100, we would make $9 per stock.
However, we have to deduct the premium that we paid for the option, which is $1.80. So this means here we are making $7.20 per share. And again, if we would trade one option, one option controls 100 shares, this means that we are making $720.
The difference between these two strategies:
Strategy number two buying a put, you need much less money. Your broker does not hold any of your funds. If I want to buy this option, so I want to buy this option and I'm clicking on review and send, it would only cost me $180.
Recommended links and video:
How to manage a trade that's in trouble: • How To Manage A Trade ...
Cash Covered vs Naked Puts: • Cash Covered vs Naked ...
Wheel Strategy Playlist: Wheel Playlist:
• Options Income Trading...
#StockMarket #FallingMarket #OptionsTrading
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[@rockwelltradingservices]

Did you enjoy this video? What other topics would you like to see me cover in a video? Let me know in the comments below. Recommended links and video: How to manage a trade that's in trouble: kzbin.info/www/bejne/fWfXgX6Xr5Vmh9E Cash Covered vs Naked Puts: kzbin.info/www/bejne/l4a5qGx-jtd5fKc Wheel Strategy Playlist: Wheel Playlist: kzbin.info/aero/PLBa3sAx-Io2mybLLdWtbjTFqK9-BR5SJb

[@ProfRoofs]

Strategy #3: Call Credit Spread Strategy #4: Call Calendar Spread Strategy #5: Iron Condor or Fly Lol learned a lot in a year or staying at home and studying stocks

[@sabriath]

You can do a PMCP as well, it's similar to a PMCC but you do it with Puts instead of Calls. The idea is to get rid of your extrinsic valuation in your first short week/month and then roll as needed. For example, AAPL is sitting at 136.35 right now. If you think it's going down, you could sell the 12Feb135P and buy the 26Feb146P for a total of 9.55. If the stock goes below 135 by the end of the week, you get back 1100 (15.1% return). Otherwise, you could roll the 135P to try and keep getting credit and hope that by 26Feb that it has fallen below your break even....which is 136.45. If the stock climbs against you, you could still collect SOMETHING from rolling the put, but at least you'll only "lose" $955 at most in this trade.

[@Notone6789]

Why would someone short stock instead of buying a put or using other option strategies? Shorting seems much riskier. Also, brokers charge interest when lending stock. It’s not too much at the moment, but it is a factor.

[@robertkimble8385]

Buying a put costs you money up front. Shorting also results in an immediate sale, which if done in large enough numbers can influence the price of some stocks. Just look at the hedge funds shorting millions of shares of GME or AMC.

[@harleyss475]

... awesome...

[@rockwelltradingservices]

Awesome! Thank you for watching! :)

[@RayfieldA]

Thank you for that Very good visual demonstration!! Your drawings are just fine. :)

[@rockwelltradingservices]

Thank you! :)

[@RayfieldA]

@@user-jn5dz1fx6f YES SIR! I am currently accruing some capital but I am not at all near 20K to start a trading account.

[@itemeodem2616]

Immer wieder eine Freude

[@rockwelltradingservices]

Thank you! :)

[@youngzen_xyz]

I like all your videos very helpful ☺️ count me in one of your subscribers 👍

[@rockwelltradingservices]

Awesome! Thank you!

[@dannyl6120]

What trading platform is good for shorts and puts?

[@edwardrhoads7283]

If I am doing the wheel during a bear market would you do it on an inverse ETF? If so what ETFs would you trade and are there any you definitely would not?

[@adamnarbeaux5898]

Selling Spx puts strategy

[@MrTchia04]

Have a nice vacation Markus.

[@rockwelltradingservices]

Thank you! :)

[@emt7039]

👏🏻 🙏

[@samwalker3441]

A naked short is the most hazardous play in the stock market. The risk is open ended. Ask the hedge funds. Buying a put is way less hazardous to your account. The most that you can lose is the amount that you paid for the put.

[@MrTchia04]

This appears to be an old video from last year. I thought $AAPL dropped from $130+ to $119 in one day on Feb 9, 2021

[@mnsweeps]

good video. In Robinhood, why don't I see a SHORT option? I can BUY a PUT but don't see the SHORT option. Any idea?

[@thomasd5488]

@M Nair SELLING an option was not mentioned in this video, but I'll try to answer anyway. " I can BUY a PUT but don't see the SHORT option." Look at the box next to the BUY box, that says SELL. You either BUY an option, to open the position, and you then SELL the option, to close the position. OR, IF you don't own the option, you can SELL an option, to open the position, and then you BUY the option, to close the position. On my Schwab account, the option drop down gives you the choices to: BTO = BUY a call or put you don't own, you are opening a long position. You PAY the premium. STO = SELL a call or put you don't own, you are opening a short position. You RECEIVE the premium. BTC = BUY a call or put you sold short, you are closing a short position. You pay the premium. STC = SELL a call or put you own long, you are closing a long position. You RECEIVE the premium. Hope this helps.

[@dr.diceshooter1227]

I do not believe Robinhood allows you to Short (Borrow to Sell) a stock. You can Buy a Put, but not Short as described for the first discussion point.

[@ariramsingh]

MJTK and UVSE on the way to Jupiter

[@ac4185]

Shorting could be pretty risky next time if you now got a group of 5 million people looking at over shorted stocks and pouncing on them.

[@abdulmanan9943]

Markus ,is there possibility if market is down but a particular stock is showing bulish trend so should i forget the market and follow particular stock which is ready to move bulish ? Even though market is falling??

[@rockwelltradingservices]

Hi Abdul, yes, of course! Just take a look at FinWiz on any given day: finviz.com/map.ashx?t=sec You will see that some stocks are up when the market is down and the other way around. That's why I use the "PowerX Optimizer" to scan for the best stocks to trade. Does this help?

[@abdulmanan9943]

@@rockwelltradingservices thanks Markus it helps and thanks alot for powe X strategy 🙂

[@billstevens5277]

strategy #3: inverse etf's.

[@stevenporter9114]

is there a way to be a seller not a buyer of options during a falling market?

[@bkittle13]

Yes, sell TZA or SQQQ or similar derivatives. Inverse ETFs. I also use VXX and UVXY for income.

[@johnhnetkovsky8917]

Yes,sell calls or call spreads,collect daily theta.

[@stevenporter9114]

@@bkittle13 Thank You

[@swing_trades_setups]

I like spreads better than buying puts! That's why we sell puts instead of buying them ;-)

[@rockwelltradingservices]

Hi Frank Berarducci, thanks for watching. And thanks for your feedback. Much appreciated. "See you" in the next video 👍

[@PederE007]

I found what my broker wanted, TD AmeriTrade, was too high.

[@lucauau]

Strategy one: no cost Strategy two: cost

[@rockwelltradingservices]

Thank you for watching , Luca!

[@jun9098]

Difficult to understand. Appl strike price is $110. It went down from 119 to 110. 110-110 = 0, so, Then, 0-180 = -$180. Also And when you buy a put. "You have a right to sell a stock at the strike price". Question: How can you sell a stock at the strike price that you don't own?

[@alexbordo1860]

Shorting is the worst strategy. Burned 3 accounts doing it. Do not do that.