Do you know you can increase the returns of bearish trades by selling options?
Today SlashTraders will show you how to use the Bear Call Spread Screener to find heavily overvalued, and downtrend stocks that you can trade high probability and high return bearish options.
We'll talk about 4 key points today:
0:43 What is a Bear Call Spread?
2:04 What are the key points to profitable Bear Call Spreads?
3:23 How to use the Bear Call Spread Screener to find the best bearish trades
4:53 The best Bear Call Spreads right now
A Bear Call Spread works by combining a short Call and a long Call at different strike prices that expire at the same time.
The Call Spread is profitable if the underlying price goes down before expiration.
When selling Call Spreads, we have a negative delta, so we want the stock price to go down to decay the option value, then we can buy to close the trade.
When the Call strikes' width stays the same, a more negative delta leads to a higher premium, lower maximum loss and higher returns.
The Bear Call Spread Screener uses chart analysis to find overvalued stocks that have a high probability of a downward correction that we can sell Bear Call Spreads to open.
The options screener uses fundamental analysis to calculate a Fair Value of the underlying.
Then compare that with the Last value to find the potential Upside of the stock.
When the Upside is less than -30%, we have high confidence in a bearish outlook.
Since we are strongly bearish about our trade, we can use -0.50 delta ATM Bear Call Spread to calculate Return on Capital.
Now you know how to use the Bear Call Spread Screener to find overstretched and overvalued stocks that are trending downwards.
Remember to use the screener often to find the best bearish Call Spreads to add negative delta in your portfolio to spread out your risks.
Please subscribe for more options trading tips
/ @slashtraders
Visit the SlashTraders blog for exclusive tips on creating passive income every month
slashtraders.com/en/blog/
斜槓投資達人
コメント