COLD BULLET TRADING

Welcome to cold bullet trading A bullet trade allows an investor to participate in a stock's bearish move, without actually selling the stock, by buying that stock's
A bullet trade is a secondary market trade that involves the act of purchasing an in-the-money option on a security so that the option buyer can effectively capitalize on the move in the underlying security without, in some instances, waiting for the exchange mandated price change.
Bullet trades are predominantly associated with bearish markets.
For example, a bullet trade allows an investor to participate in a stock's bearish move, without actually selling the stock, by buying that stock's in-the-money
Understanding Bullet Trades
A bullet trade is a secondary market trade that involves the act of purchasing an in-the-money option on a security so that the option buyer can effectively capitalize on the move in the underlying security without, in some instances, waiting for the exchange mandated price change.

Bullet trades are predominantly associated with bearish markets. An investor wants to sell their stock or participate in the price decline of a stock, but regulations require that there has to be a price tick higher before they can sell their stock or initiate a short sale. The investor can buy an in-the-money put option, which allows them to capitalize on the decline in that security's price.

A bullet trade is a strategy commonly used by investors that wish to speculate on price changes. There may be several scenarios where a bullet trade would occur. The concept of a bullet trade is based on the availability of immediate profits. The two most common include buying an in-the-money put option or an in-the-money call option. All option trades require access to derivative trading through a broker or brokerage platform.

For example, consider a bullet trade scenario where the security's price is declining, and the investor buys a put option to capitalize on the move. The owner has two variables to consider, namely the price of the option and the price of the underlying security. The put option owner profits from the difference in strike price and market price, minus the cost of the put option.