3-step guide to construct a pro-volatility option portfolio for bargain hunting.

More often than not, we eye good stock which is well-capitalized, big-sized, and most probably an index constituent

Bargain hunting has always been attracting all of us, but if we apply that in the equity markets, it leads to disastrous outcomes at times.

Market set-ups, like the one which we are in right now, often show a price which is over-pessimistic.

The million-dollar question here is though who decides “how much is too much?” Meaning, even at the lowest prices of the year one still has to account for a potential of even deeper cuts.

We will deal with this possibility of down move with a three-stepped mechanism.

Remember, options always get pricier as the underlying prices go down due to increment in the risk premium.