Learning how to make money in a bear market is a crucial skill for anyone in the markets who aims to protect capital when markets decline. In a bear market, buy-and-hold strategies can underperform, but alternative tactics like hedging can generate returns.
When discussing settlement terms, the other term for cash payment settlement option is often cash-based closing, meaning the no physical asset is delivered.
An comprehensive course on options can teach the fundamentals such as understanding call and put options. A call gives the right to buy an asset at a set price, while a put contract gives the opportunity to sell it.
In trading terminology, buy to open vs buy to close is important. Opening a position by buying means initiating exposure, while buy to close means covering a sold position.
The popular iron condor technique is an income-generating options play using both a call spread and a put spread, aiming to profit from low put option vs call option volatility.
In market orders, bid vs ask reflects the market spread. The bid is what the market will pay, and the ask price is what is required to sell.
For options, sell to open vs sell to close is another distinction. Sell to open means starting exposure by selling, while Selling to exit means ending a long trade.
Rolling options is adjusting an existing trade by changing trade parameters to capture more profit.
A trailing stop loss is a stop that follows price that locks in profits by adjusting as the asset moves. This is not to be confused with a fixed stop, since it adjusts without manual input.
Chart patterns like the M-shaped double top signal a potential reversal after two failed breakouts. Recognizing it can help traders exit early.
Overall, learning these definitions — from call and put comparison to the meaning of trailing stop loss — equips traders to navigate complex markets.