Best option position for downside bias

Quote from newwurldmn:

I would buy puts in the timeframe you are looking and consider the theta as the cost of doing business. Otherise I woud short stock and hope you are right (or at least not wrong).

If your timeframe is longer, I would look at longer dated atm puts or a series of shorter dated out of the money puts. It depends on which is cheaper, but instead fo buying 1000 atm 6m puts, why not buy 200 95% 1M puts. And keep rolling it.
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yes, buying puts seem to be the way to do it...or short calls w/ stoploss...not that i'll need it:cool:
 
Short calls your short convexity... all the downside without the unlimited upside... we get a crash calls could actually go up in value relatively.... puts are the way
 
Quote from cdcaveman:

Short calls your short convexity... all the downside without the unlimited upside... we get a crash calls could actually go up in value relatively.... puts are the way
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dont forget short calls are negative delta, which benefit from a crash. but yeah if the market crashes, the convexity is a problem, moreso on the far months. however the closer to expiry you get the more delta sensitive you become, and the less vega sensitive. i'm more worried about the unlimited downside to short calls, which is why i mentioned the stoploss if i were to do that. still pondering, so far im leaning towards long puts, or maybe a combination.
 
Quote from cdcaveman:

Short calls your short convexity... all the downside without the unlimited upside... we get a crash calls could actually go up in value relatively.... puts are the way
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you may be right. My father sold whole life insurance, and one of his clients died in a plane crash
 
Quote from oldtime:

you may be right. My father sold whole life insurance, and one of his clients died in a plane crash
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how does that relate? buying whole life would be like buying a put? whole life would be more like a knock out option to me.. hahha payout on touch.. the touch of death..
 
Quote from TskTsk:

dont forget short calls are negative delta, which benefit from a crash. but yeah if the market crashes, the convexity is a problem, moreso on the far months. however the closer to expiry you get the more delta sensitive you become, and the less vega sensitive. i'm more worried about the unlimited downside to short calls, which is why i mentioned the stoploss if i were to do that. still pondering, so far im leaning towards long puts, or maybe a combination.
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short calls went up in the 87 crash.... guys lost money .. i read that somewhere.. implieds went through the roof.. causing the calls to go up in value... i'd rather just outright be long vol on a downturn.. of course your talking a single ticker though.. what ticker are you talking about.... it would be easier to profile the trade with specifics.. IE strike space liquidity, skew, etc..
 
You're starting to sound like you are actually closer to 65% sure it's going down, than 99%.
What % of the stocks float is currently being shorted?
 
Quote from cdcaveman:

how does that relate? buying whole life would be like buying a put? whole life would be more like a knock out option to me.. hahha payout on touch.. the touch of death..
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it relates because only the lucky ones that die actually make money buying insurance

selling a call on a slow deteriorating asset seems like a no brainer to me

but the question was, how to get the most bang for the buck, and since I know nothing about options, that was just my less than 2 cents worth.

The whole thing just seems kind of comical to me. The guy thinks he has identified an over valued stock which he thinks is going to go down but he's not sure how fast or when, and he asks what to do about it.

But just shorting the calls isn't good enough for him.
 
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