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How to Trade Options » OPTION TRADING STRATEGIES » Bottom Fishing Stocks Using Inflated Option Prices

Bottom Fishing Stocks Using Inflated Option Prices

One of the reasons why “bottom fishing stocks” is the best time to use this strategy is that, due to the huge stock selloff, the implied volatility in the put option prices will normally be high. This means that the near-money options that you’re selling will be at inflated prices, thus bringing you a greater credit for the transaction.

You get paid a handsome sum for simply waiting for the stock to fall further – if it does.

Another Huge Advantage

Instead of creating a vertical put credit spread for bottom fishing stocks as outlined above, you could choose instead to make it a diagonal spread. This means that you would sell the near month put option and buy a long-dated put option at a lower strike price.

You may be exercised on the near month option and own the 500 shares, ready for a covered call strategy, but you will also now have a long-dated put option at a lower strike price, over which you can continue to sell more put options each month, or under which you can create a debit spread, bringing you even more income.

Details of this strategy along with so many more powerful secrets about the art of adjustments for options trading profit are outlined in the Trading Pro System.

bottom fishing stocks strategy

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DISCLAIMER: All stock options trading and technical analysis information on this website is for educational purposes only. While it is believed to be accurate, it should not be considered solely reliable for use in making actual investment decisions. This is neither a solicitation nor an offer to Buy/Sell futures or options. Futures and options are not suitable for all investors as the special risks inherent to options trading may expose investors to potentially rapid and substantial losses. You must be aware of the risks and be willing to accept them in order to invest in the futures and options markets. Don't trade with money you can't afford to lose. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed in this video or on this website. Please read "Characteristics and Risks of Standardized Options" before investing in options. CFTC RULE 4.41 - HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT BEEN EXECUTED, THE RESULTS MAY HAVE UNDER-OR-OVERCOMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN.