How to Make Money If the Stocks Don't Move Much Either Way!

There are two strategies to make money if the stocks don't move much either way.
1. Bull Put Credit Spread:
Bull Put (Credit) Spreads are a low downside risk and limited reward strategy when stock price is expected to go up or remains there. Bull Credit Spread is very much similar to that of naked put. The only difference is that the option is bought further out of money put which protects the investor from catastrophic event. An option contract is sold on a particular stock at a certain strike price (at or near money) and the same number of option contracts are bought on the same stock with the same expiration date at a slightly lower strike price below the strike price at which bull put is sold, simultaneously. This transaction results in a net credit that is credited to the investor's account. This net credit will be maximum profit for the investor. Maximum profit is made when the stock price rises above the strike price at which put option is sold. Although bull put spreads are generally 'out of the money' trades, they can also be put on 'at the money' or 'in the money', however, it will increases risk and potential profits.
2. Bear Call Credit Spread:
This spread is similar to bull put credit spread except it is used when you expect the stock to remain at about the same level, go up slightly or go down a lot. The spread involves buying a call (OTM) at a higher strike price and selling a call at a lower strike price (ITM) with the same expiration date. This strategy is considered to be low risk and low reward strategy and profit potential is limited. The risk is minimized with the purchase of low priced call which protects when price goes up. Profit potential is limited because premium collected minus cost of the premium paid will be limited.
In a bear market, the investor need to follow a stock trading plan using different analysis, strategies and trading tools. A bear call spread is one of the techniques where investor can try to find profits in a bearish market. One can make money by selling any number of expectations as long as the option does not go in the money (ITM) before it is expired as one can keep the premium received out of sales. The higher strike price acts as an insurance agent and the strategy can be more effective in declining or stagnant markets.

Dr. Harsimran Sigh
Investor, Author and Motivational Speaker