8.3

Bearish Outlook

A bear call spread is a limited-risk, limited-reward strategy, consisting of one short call option and one long call option.

A bear put spread consists of buying one put and selling another put, at a lower strike, to offset part of the upfront cost.

This strategy is the combination of a bear call spread and a bear put spread.

This strategy is used to arbitrage a put that is overvalued because of its early-exercise feature.

This strategy consists of buying puts as a means to profit if the stock price moves lower.

The initial cost to initiate this strategy is rather low, and may even earn a credit, but the downside potential is substantial.

This strategy consists of writing an uncovered call option.

This strategy can profit from a steady stock price, or from a falling implied volatility.

A candidate for bearish investors who wish to profit from a depreciation in the stock's price.

This strategy combines a long call and a short stock position.

This strategy is essentially a short futures position on the underlying stock.

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