TC Options Insight: Tactical options strategies for market declines.


Gary Christie


April 17, 2024



Min Read

The recent reversal of U.S. indices from their uptrend, notably breaking below their 50-day simple moving averages, suggests a shift towards a bearish short-term trend. In such market conditions, choosing to trade options presents distinct advantages over shorting stock. Option trader’s benefit from the ability to define their risk upfront, limiting potential losses to the premium paid for the options contract—a stark contrast to shorting stock, where losses can escalate unless a stop-loss order is implemented at trade entry. Additionally, trading options requires less initial capital and offers leverage, allowing traders to control larger positions with modest investments. Furthermore, the flexibility of options encompasses a diverse range of strategies tailored to specific market conditions and risk preferences, providing adaptability, portfolio diversification, and profit opportunities amidst market downturns.

Trading Central Options Insight is a valuable tool that assists traders and investors in identifying the optimal strategy based on their individual directional bias and risk preferences. Whether traders have a clear bias or are still exploring market direction, TC Technical Views, powered by Trading Central's team of expert global technical analysts, offers a comprehensive trading plan. Using a top-down, trend-following approach, TC Technical Views provides actionable insights to help traders navigate the markets with confidence and clarity.

Trading Central Technical Views just updated their analysis on semiconductor company Intel Corp (INTC: NASDAQ). The view is bearish.

INTC Volatility cone for standard monthly expirations starting in June.

The volatility cone indicates a possible 13% downside move towards $31 by the June 21st expiry. This level also corresponds to TC Technical View's downside target support are of $31 giving us a high probability setup on the downside.

Following the Technical Views bearish opinion on INTC, I started answering the simple 3 step questionnaire:  2. “I think the stock will: Go down”. 3.“I think the magnitude of the move will be: Significantly downward”. 4.I am focused on: Limiting my risk”.

TC Options Insight Questionnaire

Clicking Show Results gives us 3 different bearish defined-risk option strategies. The “Bear Put Spread” is highlighted as the “Preferred Strategy” as it has the lowest risk, a requirement in question #4 above for “Limiting my risk”.

Bear Put Spread has the lowest risk of all 3 options strategies.

Buying the June 21 $36 Put at $2.40 and Selling the June 21 $33 Put at $1.15 for a net debit of $1.25 is a preferred bearish defined risk spread strategy as the lower $32 strike is right on the key downside target support level of $33 and is obtainable before the downside expected move of $31 by the June 21st expiry.

INTC short $33 Put is on the first Support target and above the expected downside move.

TC Options Insight is also indicating an Implied Volatility Rank of 80, which is high, and ideal for those traders looking to sell premium in Intel. Changing question #4 to “Creating Income/Cash flow” will instantly provide 3 bearish credit spread strategies.

Options Insight suggested 3 unique INTC Bear Call Spreads with different probabilities.

Options Insight was designed to show retail stock traders that have never considered trading options, the benefits of options strategies that replicate being long or short stock with less risk while learning the importance of volatility and expected price movement in the strike price selection process.

The investment ideas presented here are for information only.  They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.

Gary Christie is head of North American research at Trading Central in Ottawa.

Gary Christie

Head of North American Research
Gary has over 15 years in financial markets. Prior to joining TC, he served as an equity & derivatives specialist with TD Bank and Bank of America. Gary is regularly quoted in Bloomberg News, conducts many education and market outlook webinars for investment institutions all over the world and has been a guest speaker at the New York Traders Expo.
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