Also known as a long put spread, an investor can use this strategy when they anticipate a drop in the market price. The investor creates the spread by purchasing put options (options but not obligations to sell at a certain price in a certain timeframe) at a specific strike price (basically sell price), while also selling the same number of puts with the same expiration date at a lower strike price.
The potential profit is the difference between the two strike options (minus the price at which the shares were originally purchased). By buying in equal portions, the investor limits their net risk (how much money they can lose).
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Finance: What's the Difference Between B...159 Views
Finance a la shmoop what's the difference between bear and bull? bear
pessimistic bad growly things coming Negative Nancy boo bear...Bull [Bear walking into water]
awesomesauce life's good you take it by the you know horns alright we're gonna
apply bear and bull to markets here but they apply to a whole lot of things and
a bear market is actually technical nomenclature that refers to sustained or [Bear market definition on 100 dollar bill]
prolonged periods of time where stock prices generally just fall...three
four five six seven eight quarters where the market craps the bed down down down
the bear market pattern is different from just a correction when the market
takes just a short term dump and then well you know quickly recovers yeah like [Bear market graph]
it has a bad quarter or two and then starts climbing again well that's not
the big bad bear that's just a correction a bull market is just the
opposite it goes up up up like this guy in his balloon-powered house and that's [House with balloons travels up a stock value graph]
it both are dangerous in the wild but on Wall Street huh you just have to watch
out for the Bears [Bear chasing a woman]
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