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Why & How to Keep a Bearish Bias - Aug 25, 2017 | Options Jive
The story of Tom's bearish leanings in the broad market and how it helps his short options positions.
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      Market Data provided by CME Group & powered by dxFeed Technology. Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.
      Options Jive

      Why & How to Keep a Bearish Bias

      Aug 25, 2017

      Tom is known for his permabear status – that is, he is almost always bearish on the broad equity market. Though some of this is owing to the fact that Tom constantly think the market is overvalued, a large part of his bearish bias comes from his large amount of short options trades. How do short options in the broad market indices like the S&P 500 require Tom to have short deltas in his account? This is the topic of conversation today!

      Option prices on the broad market indices tend to rise as the price of the index itself falls. Thus, if Tom is short options, then he can take some pain out of rising option prices amid a market selloff by having a bearish bias to begin with. Tom and Tony talk more specifically about how bearish they tend to be and how they manage to create this bearish bias in their portfolios in today’s Options Jive. Take a peek at the segment above for some more specifics on this bearish bias conversation.

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