Use options to circumvent the short selling ban in Europe! Deep in the money puts!

In what regulators believe is a strategy to restore confidence through this jittery market, four contries’ financial stocks’ will have a ban on short selling. Backing this hypothesis is that short selling will help reduce the impact of rumors on panic selling, bringing down stocks, and profiting short sellers.

Thursday night, the European Securities Market Authority said Belgium, France, Italy and Spain would bring forth this ban,

However, some of us still want to profit from the ebb and flow of this market, even as it plunges. Options can help you either way the market goes, and you don’t need to be shorting.

Buying puts is a buyer’s way to profit from an asset’s bearish move; Deep in the money puts carry less risk than shorting the stock, as you only pay for the contract, which is often times a fraction of the cost.

This week I profited from buying puts on $RIM, $BAC, and $SPY. I made up to 200% profit per position for moves as little as 10% on the assets price, there again. These were not Deep in the money puts, but to minimize risk for a short seller not used to options, deep in the money puts are the safest way to start.

Alternatively, if you believe the stock will have a bullish movement, deep in the money calls is a safe way to bet on them.


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