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Buy low; sell high. This would always be the perfect formula for investing if the market were always bullish. Of course the markets certainly do not behave this way, and it is entirely possible that for long periods of time a market may trend lower or just stay in a sideways trading range with no directional bias at all. Many people are unfamiliar with how to trade markets where prices are expected to stay range-bound in a price channel, neither breaking through overhead resistance nor falling through the floor of price support. Similarly, many investors are inexperienced at trading markets with bearish price expectations. So how can investors participate in markets that display a bearish trend or no directional trend at all? The thing to remember is that there are more than a few ways to trade sideways or bearish markets in an attempt to profit. Here are just a few trading techniques that you can easily understand and apply when the markets move beyond the bull. Please be advised, however, that trading futures and options involves substantial risk of loss and is not suitable for all investors.

Sideways markets stay within the same trading range over a period of time. Sideways markets are not exactly flat line, but they do tend to remain in a relatively narrow trading channel between support and resistance. In a sideways market, it can sometimes seem as though every movement toward upward gains sparks a fresh round of selling. Other times, it can seem as though every trip toward the bottom brings a group of bargain hunters who drive the price back up. This kind of price rut can be frustrating if your trading experience has been limited to long bullish positions. If a sideways market has you frustrated, you can shift your trade design focus to aim for where you believe the market will not be at expiration on either side of the channel. Here are some trades that lack directional bias and offer the potential to profit in sideways moving markets.

A straddle combines a put and call on the same underlying market with the same strike price and same expiration date. These options normally "straddle" the current market price - i.e. they are at-the-money options. The risk in a short straddle is unlimited to the upside and downside. Excluding commissions and fees, losses occur when the price of the underlying market passes the combined value of the strike price and the total net premium received from the sale of the put and call. Maximum profit is limited to the collected net premium for both options minus commissions and fees and would be achieved at expiration if the price of the underlying futures market matched the strike prices of both options. Strangles allow for a bit more wiggle room by the underlying market than straddles do. Short strangles sell an out-of-the-money put and an out-of-themoney call on the same underlying market with the same expiration date. Normally, the strike prices for each will be equidistant from the current underlying market price. The main difference between the straddle and the strangle is that the strangle has a wider range between strike prices (which at expiration is the price range for the underlying futures market). Since the options sold are further from the money than those used in a straddle, the total net premium and maximum profit are lower. Both positions present unlimited risk exposure. Like the straddle, the maximum profit for a strangle is limited to the collected net premium for both options minus commissions and fees.

Condor Spreads A short condor spread - or Iron Condor - combines a bear call spread with a bull put spread on the same underlying market with the same expiration date. The combination results in a short put, a long further out-of-the-money put, a short call, and a long further outof- the-money call. After commissions and fees, the maximum profit for a short condor spread is the combined premium received for the short put and call minus the premium paid for the long put and call.
The maximum risk after commissions and fees is the difference between the strike prices of the put or call spread minus the net premium collected. The aim of a short condor is for the underlying market price to be at or between the strike prices of the short options at expiration.

Beware the Bear
Investors may sometimes view bear markets and the troubled times that often surround them with trepidation and fear. In the futures markets, these conditions can potentially be exploited by implementing trades that can benefit from lower prices.

Bear Call and Bull Put Spreads
These two legged approaches involve selling an out-of-themoney call or put while buying a further from the money option to offer risk definition in the event that your forecast was incorrect. After fees and commissions, the short spreads have profit limited to the net premium collected and risk defined as the difference between strike prices less the net premium received.

Calls and Bear Call Spreads
Selling out-of-the-money calls or call spreads in a market you are forecasting to be on the decline can be a way to play for premium collection during a downturn. With straight short calls, the maximum risk is unlimited on an upside move. The maximum risk to a short call spread is the difference between the strike prices less the net credit received on the trade minus fees and commissions. Puts and Bear Put Spreads
Buying puts and establishing bear put spreads in a downturn is a straightforward option approach where the maximum risk is the premium paid, along with fees and commissions. Keep in mind that due to downside volatility, purchasing put options when the market is already in a downtrend may be more expensive.

Put Ratio Front Spreads A ratio front spread combines the purchase of an out-of-the-money put with the simultaneous sale of two or more further from the money puts on the same underlying market with the same expiration dates. This kind of spread does well in markets where the further out-of-the money strike prices offer solid credit possibilities due to higher or inflated premiums. The trading theory behind a put ratio front spread is that the multiple short options reduce the cost of the long option - ideally resulting in a net credit - while their strike prices should be outside what you perceive as the probable bottom since risk exposure on the uncovered puts is nearly unlimited. After fees and commissions, gains occur when the underlying futures market is at or above the strike price of the short puts at expiration.