American Option

Trading Basics

American Option

An option that can get exercised at any time during its life.

European options can only be exercised at the end.

Other Trading Basics

Bear Market

A Bear Market occurs when the price of a security is falling, and the negative outlook of the security causes the security’s price to continue to fall, causing a self-sustaining problem.

For a downturn like this to be officially considered a bear market, it must be on-going for longer than two months, otherwise it is known as a correction.

Bears are generally traders with a pessimistic view on markets that look to profit from a decline in prices.

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Contango

This is when the futures price of a security is above the cash price at maturity. The opposite is backwardation.

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