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 bear market, buy-and-hold strategies can underperform, but different approaches like options trading can produce profits.
When discussing settlement terms, what many call the cash payment settlement option is often cash settlement, meaning the transaction is settled in cash.
An options trading course can teach the fundamentals such as distinguishing between call and put options. A call contract gives the right to buy an asset at a set price, while a put gives the right to sell it.
In trading terminology, buy to open vs buy to close is important. Entering a trade via purchase means creating a new position, while Purchasing to exit means covering a sold position.
The popular iron condor technique 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 price is what a trader offers to buy, and the ask is what sellers trailing stop want.
For options, differences between sell to open and sell to close is another distinction. Initiating a short by selling means opening a short position, while sell to close means exiting a bought position.
Rolling options is moving a position forward by shifting strike or expiration to adapt to market changes.
A trailing stop is a stop that follows price 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 a bearish setup after two highs at the same level. Recognizing it can help traders exit early.
Overall, understanding these concepts — from call and put comparison to how trailing stops work — gives investors tools to succeed in any market condition.