While option traders may have struggled to be profitable over the last few months due to falling and sideways markets, some traders fared well with a basic option strategy – the Long Put. We took a look at some of the better performing option trades during the last week of February. Specifically, we looked at trades placed through Ready-Made Options Strategies.
While these trades may not be representative of all traders, we still wanted to show that put options can perform when markets are falling dramatically. One call-out is that many of these trades were held more than intraday. A second call-out is that not all of these trades were made during the expiry week. More than half of them were trades for the following expiry. If these traders originally intended to hold for a longer period to capture more downward movement on the index, choosing a further out expiry could help to minimize time decay.
Disclaimer: Derivatives trading must be done only by traders who fully understand the risks associated with them and strictly apply risk mechanisms like stop-losses. The information is only for educational purposes. We do not recommend any particular stock, securities and strategies for trading. The stock names mentioned in this article are purely for showing how to do analysis. Take your own decision before investing.