Learn How to Profit on Bearish Patterns With Put Options
Master Trader teaches many price patterns for trading stocks and options.
Last week we had a bearish market bias based on Master Trader Strategies (MTS) and Multiple Time Frames (MTF).
At Master Trader, we have several criteria to define quality setups based on the structure of the price pattern.
The Structure of the price pattern will speak to us about the relationship between buyers (demand) and sellers (supply) and the likelihood of reversals and trend continuation.
Using Bar-by-Bar Analysis, you will know what any price pattern signals — even one that can tell you to do nothing.
In this Trade Review we are going to show you the patterns and option strategy to profit from our bearish bias.
Below is a daily chart of Netflix, Inc. (NFLX):
This is the history of the trade which our subscribers see in real-time with Telegram text alerts, as well as in an Open and Closed Spreadsheet.
“2/22: NFLX - Bought Feb (2/25) $390/375 bear put debit spread for $5.90/share. Breakdown at 20-MA. 2/22: Sold half at $8.85/share for a nice 50% return in one day. 2/23: Sell at $12.10/share, take 100%+ ROC, nice trade.”
NFLX was consolidating for a few weeks, possibly poised to bounce (Breakout).
However, it couldn’t bounce; instead, showing relative weakness. We suggested buying a bear put debit spread (bearish directional option strategy) where we profit as the stock moves lower.
By selling the further out-of-the-money put, although we cap the max gains, we increase the probability of profit by reducing the cost of the long put.
Master Trader teaches many price patterns in uptrends, downtrends, and sideways trends.
We Sold half at $8.85/share for a nice 50% return in one day, then sold the rest the next day at $12.10/share, booking an average 77% return on capital (ROC) in two days!
By using the bearish debit spread, we made those impressive levered gains with less risk than shorting the stock!
Below is a daily chart of iShares Trust - iShares Russell 2000 ETF (IWM):
This is the history of the trade which our subscribers see in real-time with Telegram text alerts, as well as in an Open and Closed Spreadsheet.
“2/22: IWM - Bought Feb (2/25) $208/192 bear put debit spread for $8.50/share. Anticipated Breakdown from bear flag daily, Sell Setup and Topping Tail weekly. 2/22: Sold half at $10.42/share for a nice 22.6% return in one day. 2/24: Move Stop 30-Min. high.”
We booked an average 43% return on capital (ROC) in three days using the same methodology as NFLX.
By using the bearish debit spread, we made those impressive levered gains with less risk than shorting the stock!
For the first time, last week we had 100% short ETF positions in our ETF Investment Trader while the market was collapsing.
This service only trades ETFs over longer holding periods.
Here are the recent Closed Trades:
Notice the beautiful 29% ROC on shorting SSO (a levered ETF of the SPY)
Management updates are sent intra-day by text message to subscribers.
Nice trades!
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