Mastering strategies for earning in a bear market is an essential ability for any investor who wants to succeed when markets decline. In a bear market, simply holding stocks might not work, but different approaches like options trading can provide income.
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 teach the fundamentals such as distinguishing between call and put options. A call option gives the right to buy 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 creating a new position, while buy to close means ending an existing short.
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, bid vs ask reflects the market spread. The bid is what a trader offers to buy, and the ask is what the market demands.
For options, sell to open vs 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 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 adjusts without manual input.
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, learning these definitions — from differences between call and put to what is trailing stop loss — gives investors tools to navigate complex learn how to trade options markets.