Options ATM, OTM and ITM
You can potentially make money from a falling stock market through several strategies, commonly referred to as "bearish" strategies. Here are some key methods: 1. Short Selling How it works: Short selling involves borrowing shares of a stock and selling them at the current price. You aim to buy back the shares later at a lower price, returning them to the lender and pocketing the difference. Where to use: You can short-sell in both cash and futures markets, but it's typically more common in futures. Risks: If the stock price rises instead of falling, your losses can be significant, as you’ll have to buy the shares at a higher price. 2. Put Options How it works: Buying a put option gives you the right, but not the obligation, to sell a stock at a specified price within a certain time frame. If the stock price drops below the strike price, you can sell at the higher strike price, making a profit. Where to use: Put options are available for stocks and indices. Risks: The max...