A bear market is defined as a
drop of 20% or more in a market average over a one-year period, measured from
the closing low to the closing high. Generally, these market types occur during
economic recessions or depressions, when pessimism prevails .Bear markets reflect slowing economic growth and
corporate financial problems. Fearful traders panic and dump their holdings at
a loss, which pushes stock prices down further and ignites a fresh round of
selling. Investors can use several bear-option strategies to profit from a
market-wide selling frenzy
Step 1
Buying put options is a straightforward bear strategy with low
risk/high reward potential. The goal is for the stock price to drop below the
put option strike price so the option is in the money prior to expiration. The
amount of risk is limited to the option price plus the commission.
Step 2