Making Your Overall Option Trade Plan Adjustment in a Bear Market

Tom Gentile

Posted in

By: Tom Gentile
June 13th, 2022

3 mins read

The market slide seems like it is never going to end at times. And it may take more time than many of us want. Some are already tired of it and don’t want to open their broker accounts because of what the reality is in their accounts. For options traders, it may be no different, but if you are going to continue to make efforts to make profits trading options in a bearish environment there are three things to consider.

Trade Plan Consideration 1

Consider switching to and looking for more bearish option trading technical patterns. If you have a suite of online scanning tools like you would subscribing to you can search up bearish patterns and options that coincide with those.

The same approach in trading bullish setups is to look for a high probability setup, look for a reasonable cost option for your expectations for it and manage it to what you deem is your capital preservation point.

Trade Plan Consideration 2

Reduce the amount of trades. If you find yourself trading and feeling nervous about how many open positions you have, talk with your broker on what trades are best to either sell to close a part of or sell to close all of so as to reduce your risk and your level of nervousness.

If you get to a point where you reduced the number of trades or the size of those trades and you feel you can breathe a bit better or even sleep better, that may be the place to be.

Make not of the amount of money at risk in open positions and going forward, when you have little to no trades working, when you start opening up new trades you only consider doing so up to this same amount of monetary risk.

Trade Plan Consideration 3

And this may happen once you deem how much total risk of your portfolio you want at risk in your options trades.

Consider reducing your position size per trade. A scenario we run in our education at Toms Trading Room, LLC is risk no more than 2% of your options trading account size in any one trade. Taking a theoretical $25,000 account that would mean one does not risk or spend more than $500 per trade.

If you want to reduce that to $250 or 1% per trade that will result in less money at risk per trade. Know that you might not be able to get in to many option trades because the premiums on the options you area looking at coming in at a higher price that $2.50 per contact (1 contract = 100 shares and $2.50 – $250).

There may be less trades because of this adjustment, but that may in and of itself accomplish the trade less during a bearish market.

When things look like they are poised for a bounce or better yet a more bullish trend you can consider going back to your original trade plan with your account.

When will one know the markets are in a more bullish trend? That is a lesson for another day.

App: Toms Option Tools

Toms Option Tools scan the markets for bullish and bearish trade opportunities using our proprietary scans and strategy algorithms. TTR Darknet finds bullish entries based on triple stack channel collisions. Money Calendar identifies seasonal patterns with at least 90% accuracy looking back 10 years. Weekly Cash Clock finds short term opportunities that last a week on average. Microcurrency Trader applies Darknet technology and moving averages to cryptocurrencies. Velocity Trader utilizes volume spike and Velocity indicators on custom stock lists. Quantum Scripts scans the markets for momentum acceleration signals and employs Quantum noise filters. Optimal Trader finds directional pre-earnings opportunities that are optimized for entry date, stock movement, and volatility surge. My Trades tracks the profit/loss of your trades, displays stock charts and risk graphs, creates new trades, and edits existing trades. Morning Report provides top 10 option rankings in 6 categories each day.


Stock and options trading has large potential rewards, but also large potential risk.

You must be aware of the risks and be willing to accept them in order to invest in the stock and options market. Do not trade with money you cannot afford to lose.

This is neither an offer to buy/sell/ or recommend a particular stock or option.

Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been actually executed, the results may have under or overcompensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with hindsight.

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