In 2025, the US stock market had a rough start, with the three major indices recording their worst performance for this period since 2016, while the fear index VIX rose over 20% in the past week. Due to unexpectedly accelerating non-farm employment data in December, inflation concerns have resurfaced, significantly impacting expectations for interest rate cuts by the Federal Reserve. Additionally, the uncertainties of tariffs and other policies since Trump's administration are increasing market anxiety.
The yield on 30-year US Treasury bonds broke above 5% last Friday, while the 10-year US Treasury yield, which is more sensitive to interest rate policies and known as the "anchor for global risk asset pricing," reached its highest level since October last year and is rapidly approaching the significant psychological barrier of 5%—a level that could trigger a stock market correction. Global asset management firm Janus Henderson analyzed that "if the 10-year yield rises to 5%, people will instinctively sell stocks."

The S&P 500 Index has seen a remarkable rise over the past two years, but now faces uncertainty regarding the prospect of interest rate cuts, which may lead to some growing pains. Of course, in the long term, the movement of US stocks will still depend on economic growth. Currently, amidst the overall context of a rate-cutting cycle combined with optimistic expectations from Trump's presidency, if the US economy can maintain moderate growth, it will support the US stock market.
JPMorgan stated that while the risks faced by the strong stock market rise are increasing, the possibility of a bear market downturn is very small due to robust economic growth. "After the S&P 500 Index has risen over 20% for two consecutive years, the US stock market may see a correction of 4%-5% even 10%, but with GDP above trend levels, the bull market remains intact."
Currently, several Growth Tech stocks in the US stock market are experiencing a Top Reversal. For long-term optimistic investors, this is an attractive entry point, yet timing remains difficult. On one hand, entering too quickly may lead to substantial losses if stock prices drop beyond expectations; on the other hand, if the bottom is guessed wrong, missing the best positioning opportunity may result in not being able to purchase stocks at desirable price levels. In this situation, the flexible use of various Options strategies may enable trades to better align with market trends.
1. Sell Put Options (Short Put)
Selling Put Options is a common bottom-fishing strategy. If an investor determines that the price of a particular stock symbol has low downside risk or expects a moderate increase, they can choose to sell Put Options.
After selling Put Options, as long as the symbol price does not decline, investors will continue to receive option premium income. By selling Put Options at a desired target price, if it has not fallen below that price before the expiration date, the premium from selling the option can dilute the cost of buying stocks; if the price falls below that level, by exercising the option and holding that symbol, one can smoothly "take delivery" at that price.
In the specific execution of the strategy, one can choose a strong support level for the stock price as the exercise price. Additionally, select a Put with relatively high implied volatility to sell, and if the stock price fluctuates moderately or rises thereafter, the decrease in volatility will also enhance the earnings from selling the Put.
Taking NVIDIA as an example, choose to Sell a Put option that expires on February 14 of this year with a strike price of $130. The price of this Put is $4.42, with a breakeven point of $125.57 and a profit probability of about 70%. If the stock price does not drop below this Resistance within a month, an Option premium income of 4.42×100=442.5 dollars can be obtained; if it falls below this price, the acquisition will be at the price of 130×100=13000 dollars, and subtracting the Option premium income generated during this process, the actual buying cost will be lower than $130.

2. Buy Call Options (Long Call)
Compared to directly buying the underlying stock, buying Call options offers high leverage and low capital requirements, and it acts as a 'missed opportunity insurance' for the market, generating profits when the stock market rises and only losing the premium when the market falls.
Taking NVIDIA as an example, if one chooses to buy a Call option that expires on February 14 with an exercise price of $140, the option price is $5.7, resulting in a total premium of 5.7×100=570 dollars, which corresponds to the right to buy 100 shares of NVIDIA at $140 per share before the expiration date.
This transaction may lead to three scenarios: 1) The breakeven point is approximately $145.7. If the stock price exceeds this level, the profit is unlimited; 2) If the stock price rises above the exercise price of $140 but does not exceed $145.7, it may still not be profitable, as the increase in the Call option does not cover the premium expenditure; 3) If NVIDIA consolidates or falls, a loss may occur, but the loss is limited and will not exceed $570.

It is worth noting that buying Call options is a short-term bottom-fishing strategy, suitable for betting on a rapid rebound in the stock price; since the strategy loses time value every day, long-term holding will incur relatively high holding costs.
3. Bull Market Options Spread Strategy (Bull Call/Put Spread)
When investors anticipate that market prices will rise, but the extent of the rise is limited, and they also do not want to bear the consequences of a sharp market drop, they can use the Bull Call Spread strategy. The term "Bull Market" refers to a strategy used when there is an optimistic outlook for a market rise; "spread" refers to simultaneously buying and selling two options on the same symbol of stocks, with the same expiration date and direction but different strike prices, profiting from the price difference.
Related Reading:Bull Call Spread/Bull Put Spread
The Bull Spread strategy can be divided into Bullish Call Spread and Bearish Put Spread strategies. The trading logic of the Bullish Call Spread strategy is similar to Buying Call Options; the trading logic of the Bearish Put Spread strategy is similar to Selling Put Options.
If investors expect that the symbol stocks or Futures prices will experience a Bottom Rebound, but the rebound magnitude is limited or the speed is slow, then buying Call Options may incur excessive time decay, making it challenging to gain profit. Therefore, it is more suitable to establish a Bullish Call Spread strategy (that is, buying a Call option with a low strike price while simultaneously selling a Call option with a high strike price, with both Calls having the same expiration date). This strategy is essentially a "low-cost Buy Call Strategy (Long Call) with a profit-taking mechanism," exhibiting the nature of the option buyer.
Taking NVIDIA as an example, buy the Call option expiring on February 14 with a $135 strike price and sell the Call option expiring on the same day with a $140 strike price. Using the Option Price Calculator, the holding cost for this Order is calculated to be $235, with the maximum loss being all invested amounts, and the potential maximum profit being $265. Profit can be realized as long as the stock price rises to $137.35.

4. Risk Reversal Strategy
This Options strategy is often used as a hedging strategy to avoid risks, consisting of buying Put Options while simultaneously selling Call Options (Put Combination), or selling Put Options while buying Call Options (Call Combination). Generally, when operating, the income from selling (Put) Options can be used partially or completely to pay for the Option fees required for purchasing (Call) Options, hence it is also called a 'zero-cost strategy.'
Using the risk reversal Options strategy, if the demand for Puts exceeds that of Calls in a downtrend, then the value of selling Puts is higher, and the cost of a long Call is lower; in an uptrend, it is the opposite, so a long Call can achieve more gains while selling Puts can earn more premiums. The demand and prices for long Calls and sell Puts change with the market trend and are the main sources of profit for this strategy.
When selecting this strategy, it is important to note that the strike price of the Put options must be low enough and the expiration date of the options must be long enough. If the stock market declines significantly, this strategy will incur substantial losses, which will increase as the market falls.
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Risk Warning
Options are contracts that give the holder the right, but not the obligation, to buy or sell an asset at a fixed price on or before a specific date. The price of options is influenced by various factors, including the current price of the underlying asset, the strike price, the expiration date, andImplied Volatility。
Implied VolatilityReflecting the market's expectations for the future volatility of options over a period of time, it is data derived from the option BS pricing model, generally considered as an indicator of market sentiment. When investors anticipate greater volatility, they may be more willing to pay higher prices for options to help hedge risks, thereby leading to higher.Implied Volatility。
Traders and investors use Implied Volatilityto evaluateoption pricesAttractiveness, identifying potential mispricing, and managing risk exposure.
Disclaimer
This content does not constitute an offer, solicitation, recommendation, opinion, or guarantee of any securities, financial products or instruments. The loss risk of buying and selling options could be substantial. In certain circumstances, you may suffer losses exceeding the amount initially deposited as margin. Even if you set up backup instructions, such as stop loss or limit instructions, losses may not be avoided. Market conditions may render such orders impossible to execute. You may be required to deposit additional margin in a very short period of time. If the required amount cannot be provided within the specified time, your open contracts may be closed. However, you are still responsible for any shortfalls in your account arising from this. Therefore, before buying or selling, you should research and understand the options, and consider carefully whether such trading is suitable for you based on your financial situation and investment objectives. If you buy or sell options, you should be familiar with the exercise of options and the procedures at expiration, as well as your rights and obligations when exercising an option or at expiration.
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