The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “How do you make money when stocks go down?” The topic of this question is not how do you avoid losses when stocks go down, but specifically, how do you potentially make money when stocks go down. And so, there’s a couple of ways you can do it. Obviously, timing is a really big important factor here. We’re not talking about necessarily a huge major bear market move or a huge correction, but we’re just talking about this idea that when stocks are going through a cyclical cycle and they have their ebbs and flows of ups and downs. How do we generally make money in those environments? And if we’re going to be trading options or we’re going to be trading the underlying stock security, how do we make money? The first and most obvious way to make money on a stock going down is to short the stock. Now, that requires a lot of capital and a lot of margin to do it, but it’s the eas