Understanding how to profit during a bear market is a key competency for anyone in the markets who seeks consistent profits when prices fall. In a bear market, simply holding stocks might not work, but different approaches like short selling can provide income.
When discussing settlement terms, an alternative name for cash payment settlement option is often cash settlement, meaning the transaction is settled in cash.
An options education program can teach the fundamentals such as understanding call and put options. A call 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. Buy to open means starting a new contract, while Purchasing to exit means ending an existing short.
The iron condor strategy is a limited-risk/limited-reward structure using multiple calls and puts, aiming to profit from low volatility.
In market orders, bid compared to ask reflects the buy and sell prices. The bid is what a trader offers to buy, and the ask is what is required to sell.
For options, differences between sell to open and sell to close is another distinction. Sell to open means beginning with a sell order, while sell to close means exiting a bought position.
Rolling options is moving a position forward by shifting strike or expiration to capture more profit.
A trailing stop is a stop that follows price that locks in profits by moving with the market. This is not to be confused with a fixed stop, since it moves favorably with price.
Chart patterns like the double top chart pattern signal a potential reversal after put option vs call option a repeated resistance. Recognizing it can trigger short entries.
Overall, mastering these strategies — from differences between call and put to what is trailing stop loss — prepares market participants to profit even in challenging times.