1% University

Bear Market Playbook

A crisp, rules-based framework for selling puts through volatile markets. Use the Daily and Weekly checklists, follow the Crisis protocols, manage Hedges & Cash, and shift your Mindset from income to capital preservation + opportunity capture.

Education only. Not investment advice. Follow your broker’s risk and suitability rules.

Daily Checklist

5–10 min before U.S. open: VIX / futures scan, position triage, risk posture.

Weekly Checklist

Sunday/Monday planning: strikes, sizing, quality screen, rolling prep.

Crisis Protocols

Level 1–3 responses, 3-strike rule, black swan procedures.

πŸ“‹ Daily Bear Market Checklist

(Use each morning before U.S. open.)

Market Scan

  • VIX: <18 β†’ normal size; 8–10Ξ” weeklies OK
  • 18–25 β†’ cut size 50%, move to 12–15Ξ”
  • β‰₯25 β†’ no new naked puts; manage/hedge only
  • SKEW >135? Tail risk bid β†’ stand down
  • Overnight futures/news: look for >1% moves, CBs, Fed events

Position Risk Check

  • Any short put ITM or Ξ” > 0.60?
  • Mon–Tue: plan roll down/out today
  • Wed–Thu: roll or accept assignment + covered call
  • Loss β‰ˆ 2Γ— credit β†’ roll immediately (never β€œhope”)

Hedge Review

  • Tiny VIX call / crash put budget: 0.3–0.7%/mo
  • If VIX accelerates (+5 pts day), add 1 tranche hedge

Cash Discipline

  • Buying power usage: <30% normal, <20% bear regimes
  • Avoid correlated clusters (tech/semis/leveraged ETFs)
Open the Full Daily Master Checklist

Circuit breaker alerts: Down >5% pause; >10% emergency; >20% weekly full defensive mode.

Intraday check (lunch): roll breaches before Wed; reassess regime if VIX zone changes; note sector rotation.

πŸ“† Weekly Bear Market Checklist

(Friday review / Sunday plan.)

Pre-Trade Setup

  • Strike: Bull 5–10% OTM; Bear 15–25% OTM (aim 10–15% ITM probability)
  • Sizing: Bull 2–5%/position; Bear 0.5–2%
  • Never >50% cash tied in short puts

Quality Screen

  • $10B+ market cap, D/E <50%, positive & growing FCF
  • Bias: staples, healthcare, utilities, mega-cap tech
  • Own 3–5y if assigned? β†’ Yes only

Rolling Prep

  • Level 1: Out 1–2 wks, same strike (slightly ITM)
  • Level 2: Down + Out (10–20% breach)
  • Level 3: Assignment β†’ covered calls (Wheel)
  • 3-Strike Rule: 10% consider roll; 20% must roll/close; 30% forced liquidation

🚨 Crisis Management Playbook

Immediate Actions (VIX β‰₯25 or mkt <βˆ’10%)

  • Stop all new naked puts
  • Evaluate every position for emergency rolls
  • Raise cash to 70%+
  • Activate hedges (VIX calls / crash puts)

Opportunity Preparation

  • Ladder strikes: 15%, 20%, 25% OTM
  • Identify blue-chip assignment targets
  • Re-enter when VIX >40 and declining
Black Swan Protocol (βˆ’20% weekly)

Full stop on new positions. Close at 3Γ— premium loss. Max defensive cash. Document lessons learned.

πŸ“ˆ Recovery Mode (Post-Crash)

Assignments

  • Hold quality assignments; run covered calls above cost basis
  • Use call premium to DCA if desired

Re-Entry

  • New puts when VIX >40 and falling
  • Ladder entries; 70% conservative core, 30% volatility wing

πŸ›‘οΈ Hedging & Cash Discipline

Standing Hedges

  • VIX calls: 0.3–0.7%/mo
  • Crash puts: SPX 15–20% OTM, 30–60 DTE

Cash & Size

  • Calm: 30–50% usage; Volatile: 20–30%
  • Bear: 0.5–2% per position

Quality & Correlation

  • $10B+ mkt cap, D/E <50%, growing FCF
  • Avoid sector clustering; own 3–5y if assigned

🧠 Mental Framework

Shift the Goal

  • β€œIncome” β†’ β€œCapital Preservation + Opportunity”
  • Accept reduced weekly targets; survival > yield
  • Bear markets shorter than bulls on average

Quality Control

  • Would I own this stock at this price?
  • Is size appropriate for VIX?
  • Am I chasing premium or following rules?
  • Do I have a roll plan?
Open Longform Guide (Executive Summary + Framework)

Bottom line: In bears, shift to deeper OTM strikes (15–25%), reduce size 50–70%, master rolling, focus on blue chips, and let IV spikes pay you.

Phases: Defensive positioning β†’ Crisis management β†’ Recovery positioning. Use barbell (70% conservative core / 30% volatility wing).

3-Strike Rule: βˆ’10% consider roll; βˆ’20% must roll/close; βˆ’30% forced liquidation.

Re-entry: New puts when VIX >40 and declining; stagger entries.

Disclaimer: Educational content only. Options involve risk and are not suitable for all investors.