Bearish Long PUT Strategy with Credit Spreads

The is a vertical PUT spreads strategy (credit spreads) with the same expiry date.

DGM Trading Options
DGM Trading Options

Bearish long put strategy is not applicable when sideway trend market. It is very good to apply when the market is down trend so instead of doing a naked buy put position to cater for downtrend, we can also earn premium by selling put.

Must consider the maximum price of BTC can go in general when bearish is happening, Sell Put at the higher strike price where you think the maximum price of BTC. Sell put when IV is low.

Well, Buy Put (IV is high) at a lower strike price with 2 lots whereby the total cost must be less than the premium collected from the Sell Put just now. As the result, when the price goes up, we can still collect and earn from the outstanding premium amount.

When the price come down to zero, DGM can earn from the buy put position before the expiry date. The risk and reward ratio is the greatest because when the price is up we earn from the premium but when the price is down we earn from the bearish market.

Bull Put Spread

Conclusion, max loss is $374 and the max profit is $626. Well…..What do you think? I think it is fine with 1 to 2 Risks and Rewards ratio.

This is A Minimal Risk or No Risk Strategy

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