If so, they could be perfect candidates for a low-cost, low-risk options trading strategy that could pay off big time if we get another move like last Friday's 169-point Dow plunge.
The strategy is called a "calendar put spread," and it works like this:
- You sell a slightly out-of-the-money put option with a strike price just below the current market price of the underlying stock - with a near-term expiration date.
- You then simultaneously buy a put option with the same strike price but with a more distant expiration date.
It may sound complicated, but it's not once you understand how to employ this bearish options trading strategy.