A bear put spread profits from a stock declining, created by buying an out-of-the-money put and selling a further out-of-the-money put. Maximum profit equals strike distance minus premium. With market volatility, adding bearish trades might be wise. Examples include Starbucks (SBUX), Novo Nordisk (NVO), and Chipotle Mexican Grill (CMG).

SBUX strategy involves buying $90 put, selling $85 put for $2.80, max loss $280, max gain $220, and breakeven at $87.20. NVO trade costs $295, max loss, with max gain of $205. CMG trade costs $241, max loss, and max gain of $259. Barchart ratings indicate sell signals for all three stocks.

Risk management is crucial with bear put spreads. Set stop losses at 30% of max loss. Remember, options trading is risky, and consult a financial advisor. This information is for educational purposes only. Bear put spreads are limited-risk trades with defined losses.

Read more at Yahoo Finance: 3 Bear Put Spread Trade Ideas For This Tuesday