Understanding how to profit during a bear market is a key competency for every trader who aims to protect capital when markets decline. In a declining market, buy-and-hold strategies can underperform, but alternative tactics like options trading can provide income.
When discussing settlement terms, an alternative name for cash payment settlement option is often cash settlement, meaning the profit or loss is paid 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. Entering a trade via purchase means creating a new position, while buy to close means covering a sold position.
The iron condor options setup is a limited-risk/limited-reward structure using both a call spread and learn to trade options a put spread, aiming to profit from low volatility.
In market orders, bid vs ask reflects the two sides of a quote. The bid is what buyers are willing to pay, and the offer is what is required to sell.
For options, differences between sell 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.
Option rolling is moving a position forward by shifting strike or expiration to manage risk.
A trailing stop loss is an adjustable exit point that protects gains by tracking price 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 possible trend change 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 succeed in any market condition.