Understanding the Market Participants- Put Buyers

In the past discussions, we have shed light on the perception and thinking of market participants in a bullish market, but what would a participant do in a bearish market?
In a bearish market, the prices fall, and thus people exit on securities, buy puts, write calls, and so on. But say I choose to write calls, then what is it that attracts is what we’ll understand in this article. This can be supposed to be throwback to the previous article, where we pick out options one-by-one, and analyze them to justify our decision.

Well, in a bearish market, I could sell/short securities, and repurchase them later to book profit, but just in case my anticipated move doesn’t happen, I’ll have to book a loss. Well, this is pretty risky, and I wouldn’t want to invest money where I have equal chances of losing money. After doing some research, I learn that options are used to minimize risk, and that’s exactly what I want to do. So, in line with my anticipation that the market will fall, I understand that it’ll be beneficial to me to be able to sell at the current levels. Puts are the solution to this. When I purchase puts, effectively I gain a selling point which is equal to the strike price, and thus I buy the put options for some strike price which I anticipate the market would fall below.
This is only one of the options that a bearish trader has to himself, the other being writing of calls. Even in this, one might feel that the decision regarding the strike price is a bit random, but we’ll soon learn that the strike price can also be chosen in a logical manner.

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