As the week progressed, the rally began to crumble. Heavyweight retail stocks started missing their targets. Instead of picking individual losers, Elias moved into .
By Friday’s close, the market had set a new yearly low. The exuberant traders from Monday were now liquidated or frozen in fear. Meridian Capital, however, was up 12% on the week.
"Profiting from a crash isn't just about the way down," he told Sarah as he triggered a buy order for . "In the second leg, investors flee to quality. We want to be where the money is running to , not just where it’s running from ." The Aftermath The Second Leg Down: Strategies for Profiting a...
He stared at the flickering red and green candles on his monitor. To most, the recent bounce was a relief. To Elias, it was a "bull trap"—the cruelest part of a crashing market.
"It’s the second leg down that breaks people," Elias murmured to his protégé, Sarah. "The first drop is a shock. The rally gives them false hope. But the second leg? That’s where the real wealth transfers happen." As the week progressed, the rally began to crumble
Sarah looked at her screen, where the S&P 500 hovered precariously near a key resistance level. "So, we don't just short everything?"
"No," Elias said, leaning back. "Indiscriminate shorting is how you get run over. When the second leg starts, you need a scalpel, not a sledgehammer." Strategy 1: The Tactical Put Spread By Friday’s close, the market had set a new yearly low
Elias pointed to a major tech conglomerate whose stock had surged 15% in the relief rally despite declining earnings. "Look at the volatility. It’s cheap right now because everyone thinks the worst is over."