If you’re an animal lover, you’re going to love this next post. It’s all about bear hugs, island reversals and strangles. Wait! What the heck are the traders talking about?
Although those terms might seem like something you’d hear on a National Geographic special, they’re actually terms tossed around by traders every day.
A bear hug is an offer from one company to buy the stock of another, at a price that’s seriously higher than anyone else would otherwise pay.
An island reversal is a term used by market technicians to explain a pattern in a stock’s chart. Specifically, island reversals are isolated data points separated by gaps.
A strangle is a position in a call and put with the same maturity, different strike price.