Bear Put Spread: Strategy Risks

Posted on March 5th, 2010 admin
Bear Put Spread: Strategy Risks 5.00/5 (100.00%) 1 vote

It is important to always be aware of the strategy risks. The main risk to be aware when trading bear put spreads is there is a potential to lose all of money invested. Time decay is a risk if the share price stays still as the sold put option does not totally eliminate the risk of time decay. Also if the share price move happens too quickly the bear put spread may only have a small profit because the volatility would have increased in the out-of-the-money option, meaning it would be expensive to buy back to close out the trade.

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