By Dr. David Eifrig

I started writing Retirement Trader in 2010 to show folks like you how to take advantage of my experience in the options market. I wanted to share the techniques I learned on Wall Street in an easy, understandable format.

And as many of you already know, our strategy posted an incredible record in the bull market from 2010 through today, so much so that others have tried to copy us and make similar claims to success.

But this year, the market had a terrible start. It was the worst January since 2009. Our inbox was flooded with investors who were scared.

As I’ve shown you, this type of market action and correction is normal. (And in fact, the market has worked its way higher since then.)

But the fear that it sparked brings up a good question: Which strategy should you be using if the market provides flat or negative returns in 2016?

Today, I’m going to take the time to answer how and why we can profit in a down market.

Right now is the ideal time to be selling options on high-quality businesses.

Option selling is less risky than holding stocks outright.

When you sell an option, you generate income that lowers the total cost of your position (your so-called “cost basis”). That gives you a downside cushion.

In addition, down markets can make things better for option trades. When volatility surges, we earn more income when we sell (to open) an option position.

But rather than explain how these things help, we can show how a similar strategy that we use at Retirement Trader has historically beaten the market, even in down markets.

The Chicago Board Options Exchange (known to traders as the CBOE) maintains an index called the S&P 500 PutWrite Index. This index measures the returns of a strategy that consistently sells put options, expiring in one month, on the S&P 500 Index.

And as you can see in the following chart, it consistently beats the market.

Option selling generates better long-term returns as markets rise.

And during explosive down markets – even during market crashes, like we saw in 2000-2003 and 2008-2010 – this option-selling strategy works better than holding stocks themselves.

Almost any option seller should be able to outpace the market with a simple, rules-based strategy… without having to pick stocks or time the market.

Our Retirement Trader put-selling strategy is similar to what the PutWrite Index does. But instead of selling puts on the broad-market index, we use individual stocks and funds to help us focus on specific opportunities or sectors.

And we tend to sell options with a two-month time frame. That’s the “sweet spot” where we can earn the most income in the shortest amount of time. It’s one of our many secrets to option selling.

Finally, it bears repeating that the biggest rule we have for ourselves and forRetirement Trader subscribers is: Only sell options on stocks that you actually want to own.

That helps make our option-selling strategy less risky than owning the stocks themselves.

We can’t predict the market’s next move. But by selling options on high-quality stocks, we don’t have to.