OptionAutomator Options Trading Glossary:

Definition, Examples & Resources:Bear Trap'

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What is Bear Trap in Options Trading ?

Bear Trap
A sudden change in the bear market will result in traders being forced to cover their positions fast. A bear trap encourages bearish traders to place shorts on stock options since they expect the underlying prices to go down. But this doesn't happen. Instead, it either stays the same or starts increasing. This sudden change of direction, when prices start increasing (becomes bullish) usually traps the inexperienced trader on the wrong side of the trade.

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