Strategy: Opportunities in the Bear Markets

May 18, 2022, 3:31 pm EDT

Opportunities in the Bear Markets

Is it possible to make profits on the bear markets? Yes. It is possible. There are many investment opportunities in the bear markets. The difference is you are trading the way down not up. It requires advanced skills in timing and risk management so it may not suitable for everyone if you do not know how to handle them. If fact, it could wipe out the entire account quicker than buying the way up. However, doing properly will provide many profitable trades in the bear markets. Here we introduce two methods: short or put options.

Your trading accounts need to enable margin and option features to do so. Again, it carries a high risk so please be aware of this before going on. 

Both shorting a stock and buying a put option involve leverage. If you do not know anything about it, please do not get in until you fully understand the risks and requirements. 

There are two areas of interest in shorting or put options: retailers and home builders. It is based on the breakdown of retailers and rising rates for the home builders. 

  • Retailer: RTH-ETF, M, BBY, ULTA
  • Homebuilder: XHB-ETF, TOL, PHM, NVR

There are many opportunities beyond retailers and homebuilders on the way to go down in the next 3-6 months in various sectors and industries. Controlling your risk management skills and remembering never to lose big will make you on the right track to profitability in the bear markets.

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