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Welcome to OptionRally Academy, I'm Amy Anderson with the Term of the day.
Today we are going to talk about Bear Spread.
Bear Spread is an option method that takes advantage of plummeting security values through
buying postponed month futures contract or selling near-month futures contract.
The strategy involves the simultaneous purchase and sale of options, puts or calls and can
be used while a higher strike price is purchased and a lower strike price is sold, take note
that the options should have the same expiration date.
So what do you earn from this strategy? This method is used in the markets by selling
a future and offsetting it by purchasing a similar contract with an extended delivery
date. You make money if the underlying goes down and lose if the underlying rises in price.
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