Learning how to make money in a bear market is a crucial skill for every trader who aims to protect capital when the trend is bearish. In a declining market, traditional long positions may lose value, but alternative tactics like short selling can generate returns.
When discussing settlement terms, an alternative name for cash payment settlement option is often cash-based closing, meaning the no physical asset is delivered.
An comprehensive course on options can equip traders with knowledge 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 contract gives the right to sell it.
In trading terminology, buy to open vs buy to close is important. Buy to open means creating a new position, while Purchasing to exit means closing an open short trade.
The iron condor options setup is an income-generating options play using multiple calls and puts, aiming to benefit when prices stay within a range.
In market orders, the bid-ask difference reflects the buy and sell prices. The bid is what a trader offers to buy, and the ask price is what sellers want.
For options, differences between sell to open and sell to close is another distinction. Selling to create a position means opening a short position, while Closing a long position by selling means ending a long trade.
Rolling options is moving stocks with daily options a position forward by closing one contract and opening another to adapt to market changes.
A trailing stop is an adjustable exit point that protects gains by adjusting as the asset moves. This is not to be confused with a fixed stop, since it tightens automatically.
Chart patterns like the two-peak pattern signal possible trend change after a repeated resistance. Recognizing it can help traders exit early.
Overall, learning these definitions — from call vs put option to the meaning of trailing stop loss — prepares market participants to succeed in any market condition.