Mastering strategies for earning in a bear market is an essential ability for anyone in the markets who aims to protect capital when the trend is bearish. In a bear market, traditional long positions may lose value, but different approaches like options trading can provide income.
When discussing settlement terms, what many call the cash payment settlement option is often cash settlement, meaning the no physical asset is delivered.
An options education program can cover advanced strategies such as distinguishing between call and put options. A call contract gives the opportunity to purchase an asset at a set price, while a put gives the right to sell it.
In trading terminology, the difference between buy to open and buy to close is important. Opening a position by buying means starting a new contract, while Purchasing to exit means closing an open short trade.
The iron condor strategy is an income-generating options play using two spreads combined, aiming to earn premium in a sideways market.
In market orders, bid compared to ask reflects the buy and sell prices. The bid is what the market will pay, and the ask is what sellers want.
For options, sell to open vs sell to close is another distinction. Sell to open means opening a short position, while sell to close means ending a long trade.
Rolling options is moving a position forward by closing one contract and opening another to adapt to put vs call market changes.
A trailing stop loss is an adjustable exit point that locks in profits by adjusting as the asset moves. This is not to be confused with a fixed stop, since it tightens automatically.
Chart patterns like the double top chart pattern signal possible trend change after two failed breakouts. Recognizing it can prevent losses.
Overall, learning these definitions — from call vs put option to the meaning of trailing stop loss — equips traders to navigate complex markets.