What Is a Bear Position?

A bear position is a short position applied to a financial security with the belief that the pr🅰ice or value of the security will decre✤ase, resulting in a profit from the short position.

How a Bear Position Works

A bear position is the inverse of a bull position. A bear, or short, position is a bet against🌜 the pric⛄e of a trade or investment rising or staying flat. A bear position seeks to profit by estimating that prices will fall for certain securities in the market. This determination is usually based on the research of the investor or trader.

The seller that tak🌼es the bear position, or the short position, is called a short seller 𝔍and will borrow securities, hoping for prices to decline. If the price falls, the investor will profit from the change in price. If the price goes up, the investor or trader will take a loss and may be exposed to unlimited losses because the price of the security has the potential to continue to rise.

A bear position is in contrast to a 澳洲幸运5官方开奖结果体彩网:bull position, or 澳洲幸运5官方开奖结果体彩网:long position, in which the value of the security can move against the investor or trader’s position only by a specific amount, to zero. Using al🌜ternative strategies when initiating a bear or short position can work to mitigat꧙e some of the risks of the unlimited rising price.

There are a number of alternative ways to take bear positions. Examples of this include buying a 澳洲幸运5官方开奖结果体彩网:put option, which would entitle the buyer to sell a portion of their security within a fixed period of time. A put option is not an obligation to sell but rather an option to do so. Buying inverse ETFs, which are 澳洲幸运5官方开奖结果体彩网:exchange traded funds (ETFs) built from a variety of 澳洲幸运5官方开奖结果体彩网:derivatives, allows a buyer to profit from a decline in expected security performance. Anoth✱er possible🎃 bear position is simply taking a short position on a specific stock.

Comparing the Usage of "Bear" in Market Terminology

The use of a bear and a bull are commonly applied to market discussions and reflect the way that both of these animals attack. A bull will thrust its horns upward, while a bear throws its paws downward. These upward or downward positions track market shifts.

A 澳洲幸运5官方开奖结果体彩网:bear market, for example, is a market condition in which the price of securities decline and dwindling investor confidence leads to a self-sustaining, downward spiral in the stock market. This means that investors wil💝l expect more losses as the general pessimism increases. Although figures vary, a downturn of 20% or more over a two-month period from a peak in broad market indexes can be considered an entry into a bear market.

The meaning of a 澳洲幸运5官方开奖结果体彩网:dollar bear is, once again, reflective of a negative outlook on the market. In this case, it’s an investor’s outlook for the U.S. dollar against other currencies, expecting a decline. A bear fund is a 澳洲幸运5官方开奖结果体彩网:mutual fund that, amid marꦚket do🅠wnturns, predicts higher returns for investors.

A 澳洲幸运5官方开奖结果体彩网:covered bear is a strategy where a trader makes a short sale against a long position. This bear spread strategy aims to gain when the value of the security falls, but also includes a hedge. This structure puts a limit on losses, whereas a naked short can be subjec🎉t to much higher💧 losses.