Understanding how to profit during a bear market is a crucial skill for any investor who aims to protect capital when prices fall. In a downtrend, buy-and-hold strategies can underperform, but diversified strategies like short selling can provide income.
When discussing settlement terms, an alternative name for cash payment settlement option is often cash-based closing, meaning the profit or loss is paid in cash.
An comprehensive course on options can teach the fundamentals such as understanding call and put options. A call gives the ability to acquire an asset at a set price, while a put option gives the opportunity to sell it.
In trading terminology, understanding buy to open and buy to close is important. Entering a trade via purchase means creating a new position, while Closing a position by buying means covering a sold position.
The popular iron condor technique is a limited-risk/limited-reward structure using both a call spread and a put spread, aiming to profit from low volatility.
In market orders, bid vs ask reflects the two sides of a quote. The bid is what buyers are willing to pay, and the offer is what is required to sell.
For options, sell to open vs sell to close is another distinction. Initiating a short by selling means beginning with a sell order, while Closing a long position by selling means selling an asset you own.
Option rolling is moving a position forward by shifting strike or expiration to manage risk.
A dynamic stop loss is an adjustable exit point that protects gains 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 two-peak pattern signal possible trend change after two failed breakouts. Recognizing delta option it can trigger short entries.
Overall, mastering these strategies — from call vs put option to how trailing stops work — gives investors tools to navigate complex markets.