Are You a PLTR Bagholder? Discover How to Profit in a Bearish Market
All three indices experienced declines exceeding 2% last week. Have you also found yourself trapped?
In a scenario of holding stocks and a declining market, how can one achieve a 28% profit?
Let's take a look!
Congratulations to @Aaronykc for achieving an impressive profit of 28.28% by trading options!
Congratulations to @KOSHILAN for achieving an impressive profit of $454.58 by trading options!
Looking at the charts, both of them chose to 'sell PLTR call' options.
Aaronykc selected the November 10th call option with a strike price of $18, while KOSHILAN chose the October 27th call option with a strike price of $16. So, they had different cost prices at $0.68 and $0.46.
How to profit from selling call options in a bearish market?
An investor would choose to sell a naked call option if their outlook on a specific asset was that it was going to fall, as opposed to the bullish outlook of a call buyer. The purchaser of a call option pays a premium to the writer for the right to buy the underlying at an agreed-upon price in the event that the price of the asset is above the strike price. In this case, the option seller would get to keep the premium if the price closed below the strike price.
WARNING: A naked call position, if not used properly, can have disastrous consequences since a security can theoretically rise to infinity. On the other hand, the upside potential is limited—that limit is the price of the option's premium.
Therefore, it is better to use covered calls:
A covered call refers to selling call options, but not naked. Instead, the call writer already owns the equivalent amount of the underlying security in their portfolio. To execute a covered call, an investor holding a long position in an asset then sells call options on that same asset to generate an income stream.
The investor's long position in the asset is the 'cover' because it means the seller can deliver the shares if the buyer of the call option chooses to exercise. If the investor simultaneously buys stock and writes call options against that stock position, it is known as a 'buy-write' transaction.
Covered call strategies can be useful for generating profits in flat markets and, in some scenarios, they can provide higher returns with lower risk than their underlying investments."
What is your strategy for dealing with a bearish market?
🎁Rewards：
Feel free to share your $Palantir Technologies Inc.(PLTR)$ positions in the comment section for a chance to win Tiger Coins!
If you've achieved profits from other potential stocks we don’t know, kindly share your trading strategies in your post, and remember to include the topic "Winning Trades". Hope you'll be the next one to make it onto the leaderboard~
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Great ariticle, would you like to share it?
Great ariticle, would you like to share it?
Great ariticle, would you like to share it?