Vanilla Options Bear Spread Strategies
Bearish option strategies are used when the options investor believes the underlying stock price is going to move downward. It is essential the investor assesses how low the stock price can fall and the time frame in which the decline will occur in order to select the best trading strategy.
The most bearish of options strategies is the simple put option buying strategy. This is a strategy that is used by most new investors just like you and is utilized when the stock price is expected to move quite a bit from the current price.
It is unusual for a stock price to make steep movements either up or down. So when investors believe the share price will have a moderate move downward, they use bear spreads ...
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