Crash Leads to OPPORTUNITY! Make Money with BBY Covered Put!

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The stock market is red, and for many, that signals panic. But for seasoned traders, a market downturn presents an opportunity to reassess, rebalance, and profit. In this blog, we break down how to make money even in a falling market using a covered put strategy, inspired by Mark Yegge’s latest trading approach.

Navigating a Red Market

On a rough trading day, when nearly every stock is down, it’s easy to feel anxious. However, Mark Yegge sees this as an opportunity to "weed the garden" and make strategic moves. He has largely stayed in cash for weeks, anticipating market declines. While he holds some positions, his strategy revolves around making consistent income rather than attempting to predict stock movements.

The Deep In-The-Money Covered Call Strategy

One of Mark’s key strategies involves deep in-the-money covered calls. He currently holds Apple (AAPL) shares and has sold covered calls at various strike prices. By staying deep in the money, he gains protection and ensures steady income through options premiums (also known as "juice").

How It Works:

By selling deep in-the-money calls, Mark locks in premium income.
If the stock moves down or sideways, his in-the-money position cushions potential losses.
Weekly or bi-weekly rollovers allow for continuous income generation.

As an additional strategy, Mark added a synthetic call—a deep-in-the-money option that mimics stock ownership—to further leverage his position.

The "Covered Put" Strategy Explained

While covered calls generate income in a bullish or sideways market, covered puts offer a way to profit in a bearish market. Mark applied this strategy to Best Buy (BBY), which showed signs of breaking down in previous weeks.

How It Works:

Buying a Long Put – Mark purchased a put option on BBY, anticipating further declines.
Selling Short Puts – To generate income, he sold put options against his long put position.
Rolling Down the Puts – As the stock dropped, he rolled his puts down gradually to lock in more "juice."

This strategy allows traders to profit from a declining stock while maintaining a consistent cash flow.

Executing the Trade: Rolling the Puts

To maximize returns, Mark doesn’t wait until expiration. Instead, he rolls his puts to a lower strike price, collecting more extrinsic value (juice) in the process.

Trade Breakdown:

He initially sold 73-strike puts expiring on April 4th.
As BBY continued declining, he rolled down to 67-strike puts expiring on April 11th.
This trade generated approximately $2,000 in premium income for the week.

Life-Improving Tips for Options Traders

Stay Disciplined – Don't chase trades. Stick to a well-defined strategy and risk management plan.
Keep a Cash Reserve – Holding cash in volatile markets allows you to capitalize on new opportunities.
Focus on Income, Not Predictions – Trying to predict market movements can be risky; instead, prioritize steady income streams.
Learn to Roll Options – Rolling options allows you to manage risk and maximize profits in changing market conditions.

FAQs

Q: What is the main benefit of using a covered put strategy? A: Covered puts allow traders to profit in a declining market by selling options premiums while holding a protective long put.

Q: Is rolling puts necessary? A: Rolling puts helps lock in profits, minimize risks, and adapt to market movements more effectively.

Q: Can beginners use this strategy? A: Yes, but it's essential to understand options trading fundamentals before implementing covered puts.

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Conclusion

Mark Yegge's approach demonstrates that market downturns don’t have to be feared—they can be leveraged for profit. By focusing on structured strategies like covered calls and covered puts, traders can generate consistent income regardless of market direction. Whether you're new to options trading or a seasoned investor, incorporating these techniques can help you navigate volatility with confidence.

Crash Leads to OPPORTUNITY! Make Money with BBY Covered Put!

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