Understanding how to profit during a bear market is a crucial skill for every trader who aims to protect capital when prices fall. In a downtrend, buy-and-hold strategies can underperform, but diversified strategies like options trading can provide income.
When discussing settlement terms, an alternative name for cash payment settlement option is often cash-based closing, meaning the profit or loss is paid in cash.
An options education program can teach the fundamentals such as distinguishing between call and put options. A call gives the ability to acquire 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. Buy to open means creating a new position, while buy to close means closing an open short trade.
The iron condor options setup is an income-generating options play using two spreads combined, aiming to profit from low volatility.
In market orders, the bid-ask difference reflects the two sides of a quote. The buy bid is what buyers are willing to pay, what is the other term for the cash payment settlement option and the ask price is what sellers want.
For options, differences between sell to open and sell to close is another distinction. Selling to create a position means beginning with a sell order, while sell to close means selling an asset you own.
Rolling options is extending or changing terms by closing one contract and opening another to capture more profit.
A dynamic stop loss is a stop that follows price that limits downside by moving with the market. This is not to be confused with a fixed stop, since it tightens automatically.
Chart patterns like the M-shaped double top signal possible trend change after two failed breakouts. Recognizing it can help traders exit early.
Overall, understanding these concepts — from call and put comparison to the meaning of trailing stop loss — gives investors tools to profit even in challenging times.