Learning how to make money in a bear market is a key competency for every trader who wants to succeed when markets decline. In a declining market, buy-and-hold strategies can underperform, but diversified strategies like short selling can produce profits.
When discussing settlement terms, what many call the cash payment settlement option is often cash settlement, meaning the profit or loss is paid in cash.
An options trading course can teach the fundamentals such as understanding call and put options. A call contract 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 starting a new contract, while Closing a position by buying means closing an open short trade.
The popular iron condor technique is a limited-risk/limited-reward learn option trading structure using both a call spread and a put spread, aiming to benefit when prices stay within a range.
In market orders, the bid-ask difference reflects the market spread. The bid price is what the market will pay, and the ask price is what sellers want.
For options, sell to open vs sell to close is another distinction. Sell to open means opening a short position, while sell to close means selling an asset you own.
Option rolling is moving a position forward by closing one contract and opening another to adapt to market changes.
A dynamic stop loss 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 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 — prepares market participants to navigate complex markets.