From Nasdaq Inc.:

Stock markets are taking a bearish turn, making it a good time to check in on the bear put spread screener. A bear put spread is a vertical spread that seeks to profit from a stock’s declining price. The maximum profit is the distance between the strikes, less the premium paid. The maximum loss is the premium paid. Barchart’s Short Bear Put Spread Screener shows impressive trades with high Max Profit Percentage.

An example is a bear put spread on Apple (AAPL). It uses the March 15 expiry and involves buying the $185 put and selling the $150 put, with a trade price of $6.02. Another example is a bear put spread on Microsoft (MSFT) with a maximum loss of $1,561 and a maximum gain of $5,939. A bear put spread example on Exxon Mobil (XOM) shows a cost of the trade of $529 and a maximum gain of $1,971.

Noted is that a bear put spread is a risk-defined trade, so a stop loss of 30% of the max loss is advised for each trade. It’s important to remember that options are risky and investors can lose 100% of their investment. As always, this article is for educational purposes and not a trade recommendation.

More Stock Market News from Barchart can be found on their official website. The information and data in this article are solely for informational purposes — the author did not have any positions in the securities mentioned. The views and opinions expressed are those of the author and do not necessarily reflect those of Nasdaq, Inc.



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