Understanding how to profit during a bear market is an essential ability for anyone in the markets who seeks consistent profits when the trend is bearish. In a bear market, simply holding stocks might not work, but alternative tactics like options trading can provide income.
When discussing settlement terms, the other term for cash payment settlement option is often monetary settlement, meaning the transaction is settled in cash.
An options education program can cover advanced strategies such as distinguishing between call and put options. A call gives the ability to acquire an asset at a set price, while a put option 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 popular iron condor technique is a limited-risk/limited-reward structure using both a call spread and a put spread, aiming to benefit when prices stay within a range.
In market orders, the bid-ask difference reflects the market spread. The bid price is what the market will pay, and the ask price 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 Closing a long position by selling means selling an asset trading plan you own.
Option rolling is moving a position forward by closing one contract and opening another to adapt to market changes.
A dynamic 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 tightens automatically.
Chart patterns like the double top chart pattern signal a bearish setup after two highs at the same level. Recognizing it can help traders exit early.
Overall, learning these definitions — from differences between call and put to what is trailing stop loss — prepares market participants to navigate complex markets.