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For example, a GBPUSD contract could give the owner the right to sell £1,000,000 and buy $2,000,000 on December 31. In this case the pre-agreed exchange rate, or strike price, is 2.0000 USD per GBP (or GBP/USD 2.00 as it is typically quoted) and the notional amounts (notionals) are £1,000,000 and $2,000,000.
Bullish vs. Bearish Market. As with investors and stocks, a market can also be bullish or bearish. A bull market is generally defined as a period of consistent, overall upticks in the market ...
The most bearish of options trading strategies is the simple put buying or selling strategy utilized by most options traders. The market can make steep downward moves. Moderately bearish options traders usually set a target price for the expected decline and utilize bear spreads to reduce cost.
To help remember that bearish means falling prices, think of a bear clawing down on its prey. A bear market is essentially the opposite of a bull market, meaning that it is a prolonged period of ...
If the trader is bullish, you set up a bullish credit spread using puts. Look at the following example. Trader Joe expects XYZ to rally sharply from its current price of $20 a share. Write 10 January 19 puts at $0.75 $750 Buy 10 January 18 puts at $.40 ($400) net credit $350 Consider the following scenarios:
Conversely, a higher reading (~1.02) of the ratio indicates a bearish sentiment in the market. However, the ratio is considered to be a contrarian indicator, so that an extreme reading above 1.0 is actually a bullish signal and vice versa. [2] The lowest level of the index was 0.39x, set in March 2000 at the peak of the dot-com bubble. [2]
"Everyone hates stocks and loves bonds," one analyst said. Essentially, this is a classic "it's so bullish it's bearish" argument.
A close-to-historic-low spread may signal a bottom, indicating a potential market turnaround. Conversely, an extreme high in bullish sentiment and an extreme low in bearish sentiment may suggest a market top or an imminent occurrence. This contrarian measure is more reliable for coincidental timing at market lows than at market tops.