Will The Stock Market Crash? | Best Stock Strategy
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Stock Market Crash

Will the Stock Market Crash?

Everyone seems to be asking, will the stock market crash?

David Jaffee with Beststockstrategy.com shared his insight into a potential stock market crash.

Keep reading to learn if the stock market will crash, how to outperform the market, and how to protect your portfolio.

David Jaffee does not believe the stock market will crash. 

Around mid-September 2021, the stock market began experiencing a large increase in its daily intraday trading range.

Additionally, there has been an increase in the volatility index (“VIX”) from around 15 to the mid-20s.

In David Jaffee’s opinion, the stock market is going to experience a grind-down market. David Jaffee does not believe that the stock market is going to crash. 

The reason he does not think it will crash is that we have not experienced a large spike in the volatility indices - both the VIX and the VVIX have been relatively tame in their increase.

During a large sell-off, it is not uncommon to see the VIX increase from about 15 to 35 or 40. However right now, the VIX is trading in the low to mid-20s.

As a result, David Jaffee believes that if the stock market decreases in value, it'll be a relatively slow pullback.

David Jaffee anticipates a grind-down market as opposed to a full-on, violent crash.

How to Profit in a Bear Market / Grind-Down Market

What can you do to profit and take advantage in a bear market or during a market pullback? 

David Jaffee is selling call options during this time. 

One of the primary reasons for that is that call options are easy to manage and roll if they’re challenged, even though call options tend to get challenged more frequently than put options. 

The market does not crash up. Instead, the market has a tendency to crash down.

As a result, even if your call options do get challenged, it's pretty easy for you to manage and roll those positions until they're profitable.

However, because the market has a tendency to go up, it’s prudent to sell call options further OTM than you would sell a put option. Additionally, if you’re selling calls on companies like TSLA or NVDA, then David Jaffee would recommend selling a call that’s ~30% OTM with a short-dated expiration of 1 to 2 weeks. 

During times of high volatility, David Jaffee recommends, if you're going to sell put options, choosing strikes that are further out of the money (especially because you’re able to collect more premium during periods of heightened option volatility).

He also recommends that you only sell put options on high quality, liquid underlyings that you perceive are oversold at that specific time.

Probably the most important aspect, according to David Jaffee, is to make sure that you stay small and that you do not try to guess the bottom.

During a sell-off or a large volatility expansion event, the worst thing that you can be is too early. It's better to be too late and to miss a trade than it is to be too early.

Remember, in the stock market, you are rewarded for making good decisions. You are not rewarded for taking action. 

So, if you see the stock market selling off, that doesn't necessarily mean that you should jump in and use a significant amount of your buying power right now.

Instead, it would be more prudent to wait for the market to stabilize and to not try to guess the bottom.

Learn How to Outperform the Stock Market by Trading Options

David Jaffe with BestStockStrategy.com teaches his students how to implement these strategies. 

We target a return of about 3% every month by selling options. 

Option sellers who are disciplined and patient are able to achieve significant alpha during grind-down bear markets.

David Jaffee hopes that his students and other traders are able to put these quick tips to use and utilize them to outperform the market, protect their portfolio, and also realize large profits.

You can learn more about options trading from David Jaffee at BestStockStrategy.com. Sign up today to receive $400 in free options trading training materials.

About the Author David Jaffee

I (David Jaffee) help people become consistently profitable traders while minimizing risk. I graduated from an Ivy League University and worked at some of Wall Street's most successful investment banks. Subscribe to my YouTube channel for valuable videos - BestStockStrategy YouTube Channel​. Finally, if you're looking to Land a Finance Job, then I've put together the best step-by-step course at LandaFinanceJob.com. My personal website is DavidJaffee.com.

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