An investor who acts on the belief that a security or the market is falling or is expected to fall.
Bear Call Spread: A strategy in which a trader sells a lower strike call and buys a higher strike call to create a trade with limited profit and limited risk. A fall in the price of the underlying increases the value of the spread. Net credit transaction; Maximum loss = difference between the strike prices less credit; Maximum gain = credit; requires margin.
Bear Market: A declining stock market over a prolonged period of time usually caused by a weak economy and subsequent decreased corporate profits.
Bear Put Spread: A strategy in which a trader sells a lower strike put and buys a higher strike put to create a trade with limited profit and limited risk. A fall in the price of the underlying increases the value of the spread. Net debit transaction; Maximum loss = d ifference between strike prices less the debit; no margin.
Bearish: An adjective describing an opinion or outlook that expects a decline in price, either by the general market or by an underlying stock, or both.
Bear Spread: An option strategy that makes its maximum profit when the underlying stock declines and has its maximum risk if the stock rises in price. The strategy can be implemented with either puts or calls. In either case, an option with a higher striking price is purchased and one with a lower striking price is sold, both options generally having the same expiration date.