Glossary of Trading Strategies

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  1. Arbitrage: Taking advantage of price discrepancies by buying and selling to create a risk free trade.
  2. Ask Price: The price it costs to buy an option.
  3. Assignment: When the writer of a contract is required to fulfill their obligations under the terms of that contract – for example buying the underlying security if they have written calls or selling the underlying security if they have written puts. The writer will be issued with an assignment notice in such circumstances.
  4. At the Money Option: An option where the price of the underlying security is the same as the strike price.
  5. Bear Call Spread: A simple strategy, using calls, that can be used when the expectation is that the underlying security will decline in price.
  6. Bearish: An expectation that an option, or any financial instrument, will decrease in price.
  7. Bearish Trading Strategies: Strategies that can be used to profit from a downward move in the price of a financial instrument. 
  8. Bear Market: When the overall market is in decline.
  9. Bear Put Ladder Spread: This is an advanced strategy that can be used when the outlook on an underlying security is bearish.
  10. Bear Put Spread: A simple strategy using puts that can be used when the expectation is that the underlying security will decline in price. Learn how to use a Bear Put Spread.

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  1. Bear Ratio Spread: This is a strategy that can be used when the outlook on an underlying security is bearish.
  2. Bear Spread: A spread that is created to profit from bearish movements.
  3. Bear Trap: An unconfirmed market movement which suggests a bear market, but is unconfirmed and ends up with the market moving upwards.
  4. Bid Price: The price at which an option can be sold.
  5. Bid Ask Spread: The difference between the bid price and the ask price of an option. An indicator of liquidity, and often referred to simply as the spread.
  6. Bullish: An expectation that an option, or any financial instrument, will increase in price.
  7. Bullish Trading Strategies: Strategies that can be used to profit from an upward move in the price of a financial instrument. List of Bullish Strategies.
  8. Bull Market: When the overall market is moving upwards.
  9. Bull Put Spread: A simple strategy, involving puts, which can be used when the expectation is that the underlying security will increase in price. Learn how to use a Bull Put Spread.
  10. Bull Spread: A spread that is created to profit from bullish movements.
  11. Call Option: A type of option which grants the holder the right, but not the obligation, to buy the relevant underlying security at an agreed strike price.

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