If you’re new to trading, you might find it hard to believe that you can win with bullish trades during a bear market. Lo and behold, that’s what we’ve been doing here at Explosive Options since the markets plummeted in March. Our portfolio is up handsomely YTD – more than 40%.

As an options trader, you have to be uniquely aware of current market conditions. The markets are littered with land mines, and when you place a trade, you are basically out in an open field. A breaking story or left-field tweet could spell disaster for your profits. Leaning too hard in one direction can clobber you, too.

How to win with bullish trades during a bear market

Over the years, my portfolio has been hit hard when I have leaned too hard in one direction. Barreling straight at the bears with a full slate of bullish positions has cost me dearly. I was so sure my trades would work that my ego got in the way. I often ended up paying a steep price for the valuable lesson.

Here’s what I do now:

I always carry protection via index puts, whether I have long calls or short puts in my portfolio. Bear markets are notorious for their volatility, and holding some protection allows me sleep much better at night. When I don’t have protection working for me, I’m worried.

In fact, I am much more comfortable adding bullish trades during a bear market when I have puts working. It’s one of the best risk management strategies you can use.

Remember, the goal here is to reduce portfolio volatility. Index puts may not allow you to max out an up day, but you will certainly reduce losses on a down day. When market conditions are severe – like they were earlier this year – you’ll be happy to have that protection working for you.