We have changed our privacy policy. In addition, we use cookies on our website for various purposes. By continuing on our website, you consent to our use of cookies. You can learn about our practices by reading our privacy policy.


Bear Spread

  

Categories: Derivatives, Stocks, Trading

Sounds like something scandalous at Yosemite, but really, it refers to a situation where an options trader buys and sells options in the same class at the same time. The trader thinks that the underlying security prices will drop. By buying options on different dates, losses can be kept to a minimum.

Related or Semi-related Video

Finance: What's the Difference Between B...159 Views

00:00

Finance a la shmoop what's the difference between bear and bull? bear

00:07

pessimistic bad growly things coming Negative Nancy boo bear...Bull [Bear walking into water]

00:13

awesomesauce life's good you take it by the you know horns alright we're gonna

00:19

apply bear and bull to markets here but they apply to a whole lot of things and

00:22

a bear market is actually technical nomenclature that refers to sustained or [Bear market definition on 100 dollar bill]

00:27

prolonged periods of time where stock prices generally just fall...three

00:31

four five six seven eight quarters where the market craps the bed down down down

00:35

the bear market pattern is different from just a correction when the market

00:40

takes just a short term dump and then well you know quickly recovers yeah like [Bear market graph]

00:45

it has a bad quarter or two and then starts climbing again well that's not

00:49

the big bad bear that's just a correction a bull market is just the

00:53

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]

00:57

it both are dangerous in the wild but on Wall Street huh you just have to watch

01:01

out for the Bears [Bear chasing a woman]

Up Next

Finance: What is a Bear Hug?
7 Views

What is a Bear Hug? A bear hug happens when one company buys shares of another company at a price that is a lot higher than what the shares are tra...

Finance: What is a Bear Raid?
8 Views

What is a Bear Raid? A bear raid refers to the processes used to try to lower a stock price. It usually involves spreading rumors about the company...

Find other enlightening terms in Shmoop Finance Genius Bar(f)