Stock market assumptions
When you think that the stock market will go up or down we make certain assumptions.
![Stock market assumptions 1 Stock market assumptions](https://wealthdiagram.com/wp-content/uploads/2022/12/Stock-market-assumptions.png)
Stock market assumptions
If we assume correctly, we make money
Assumption that the stock market will go up
- We buy stocks – we profit by stock appreciation
- We buy call options
- We sell put options
Assumptions that the stock market will go down
- We short sell stocks – We borrow 100 shares, when price decline we buy new shares, profit on the difference
- We sell call options
- We buy put options