Understanding how to profit during a bear market is an essential ability for any investor who aims to protect capital when markets decline. In a declining market, simply holding stocks might not work, but alternative tactics like options trading can generate returns.
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 trading course can equip traders with knowledge such as call vs 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. Entering a trade via purchase means initiating exposure, while buy to close means covering a sold position.
The iron condor options setup 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 price is what the market will pay, and the ask price is what the market demands.
For options, understanding sell to open and sell to close is another distinction. Selling to create a position means starting exposure by selling, while Selling to exit means ending a long trade.
Option rolling is adjusting an existing trade by closing one contract and opening another to manage risk.
A dynamic stop loss is an adjustable exit point that protects gains by tracking price trading plan in real time. This is not to be confused with a fixed stop, since it moves favorably with price.
Chart patterns like the two-peak pattern signal a bearish setup after two highs at the same level. Recognizing it can prevent losses.
Overall, understanding these concepts — from call and put comparison to how trailing stops work — gives investors tools to navigate complex markets.