Learning how to make money in 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 different approaches like hedging can produce profits.
When discussing settlement terms, the other term for cash payment settlement option is often cash-based closing, meaning the transaction is settled in cash.
An comprehensive course on options can teach the fundamentals such as understanding call and put options. A call gives the right to buy 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. Buy to open means starting a new contract, while Purchasing to exit means ending an existing short.
The iron condor strategy is an income-generating options play using two spreads combined, aiming to benefit when prices stay within a range.
In market orders, the bid-ask difference reflects the market spread. The buy bid is what a trader offers to buy, and the offer is what is required to sell.
For options, differences between sell credit spread to open and 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.
Rolling a position is extending or changing terms by changing trade parameters to adapt to market changes.
A trailing stop 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 M-shaped double top signal a potential reversal after two failed breakouts. Recognizing 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.