Bear markets have been occuring throughout history. In fact many of the same basic main causes of the great depression have caused smaller bear markets leaving it to be an endless cycle of ups and downs. But they do not have to be bad things. They are simply cycles that occur now and then and just like bulls markets investors can profit from them.
Yes, it’s true one of the facts on the great depression is that investors still made money, even in the terrible market crash. They do so in one of these three ways.
1. Shorting Stocks
Short Selling a Stock is something investors can do to sell a stock now and buy it back later on. Basically instead of buy low sell high it attempts to buy high sell low. It can be a great way to take advantage of a falling market.
2. Put Options
Another way to make money from a falling stock is to buy a put option. These options give you the right to sell a stock at a specific price on or before a given date in the future. If the stock drops in value the put option will appreciate.
It is basically a way to gain leverage in the stock market while at the same time playing the downside. It can even be used to limit your risk because unlike shorting stocks you can only lose the amount that you put into it.
3. Selling Calls
Call options are the other side of the option chain. They allow investors to buy a stock at a given price on or before a given date in the future. You can sell call options but if you do you are obligated to sell the stock at a given price on or before the expiration date.
The idea is to sell call options at a strike price that the stock is not likely to exceed. As the stock stays below that price the option eventually expires making you money. However this can be the riskiest strategy so don’t attempt it unless you know what you are doing.
Hey admin, incredibly informative blog post! Pleasee continue this awesome work..
Good post. I’ve got to say that it’s been really fascinating seeing investing recommendations sway in the last couple years. What do you think?