Even when a stock is plummeting there is money to be made. This is how to make money when a stock is dropping.
Writing covered calls.
If you currently own the stock that is dropping you can still make some money from it by writing covered calls. When you sell calls to a person you immediately collect the premium that you sell it at. The closer to it being “in the money” the more expensive the premium will be. So if you know it is going to continue to be bearish but you are not wanting to sell your stock, write some covered calls.
If you do not own the stock.
While you can write covered calls if you own the stock, what do you do if you do not? Buy puts. Buying puts is a great way to make an incredible amount of money from a stock that is tanking. If the stocks falls the way you think it will you can multiply the amount of money you have invested in puts by over 10. The more the stock drops the more money that you can make.
Wait until there is an entry point.
Sometimes the more a stock goes down the better it is for someone looking to get in on a certain stock. The lower the price goes, the better the entry point. If a stock is falling, and it is undervalued, it should eventually go up. Buying a stock that is undervalued is like buying a stock at a discount price. Even though it is worth more, it is selling for less. So look for these undervalued stocks to invest in.