In finance, a long
position
Position often refers to:
* Position (geometry), the spatial location (rather than orientation) of an entity
* Position, a job or occupation
Position may also refer to:
Games and recreation
* Position (poker), location relative to the dealer
* ...
in a
financial instrument means the holder of the position owns a positive amount of the instrument. The holder of the position has the expectation that the financial instrument will increase in value.
This is known as a
bullish
Market sentiment, also known as investor attention, is the general prevailing attitude of investors as to anticipated price development in a market. This attitude is the accumulation of a variety of fundamental and technical factors, including ...
position.
Security
In terms of a
security" \n\n\nsecurity.txt is a proposed standard for websites' security information that is meant to allow security researchers to easily report security vulnerabilities. The standard prescribes a text file called \"security.txt\" in the well known locat ...
, such as a
stock or a
bond
Bond or bonds may refer to:
Common meanings
* Bond (finance), a type of debt security
* Bail bond, a commercial third-party guarantor of surety bonds in the United States
* Chemical bond, the attraction of atoms, ions or molecules to form chemica ...
, or equivalently ''to be long'' in a security, means the holder of the position owns the security, on the expectation that the security will increase in value, and will profit if the price of the security goes up. ''Going long''
a security is the more conventional practice of
investing
Investment is the dedication of money to purchase of an asset to attain an increase in value over a period of time. Investment requires a sacrifice of some present asset, such as time, money, or effort.
In finance, the purpose of investing i ...
.
Future
Going long in a
future means the holder of the position is obliged to buy the underlying instrument at the contract price at expiry.
The holder of the position will profit if the price of the underlying instrument goes up, as the price he will pay will be less than the market price.
Option
An
options investor goes long in an underlying investment (in technical jargon, the preposition "in" is omitted) by buying
call options or selling
put options on it. This is different from going long by buying the underlying or trading in futures, because a long position in an option does not necessarily mean that the holder will profit if the price of the underlying instrument goes up. Going long in an option gives the right (but not obligation) for the holder to exercise it.
If the price rises to above the
strike price
In finance, the strike price (or exercise price) of an option is a fixed price at which the owner of the option can buy (in the case of a call), or sell (in the case of a put), the underlying security or commodity. The strike price may be set ...
, the owner of a call option will probably exercise the option to buy the instrument and (at least on paper) will gain if the difference between the price at that time and the strike price is greater than the premium which he paid. With a put option on the other hand, the seller of the option will profit (on paper) if the price of the instrument goes up (so that the option is not exercised by the buyer), or falls by less than what he received as a premium.
See also
*
Short (finance)
In finance, being short in an asset means investing in such a way that the investor will profit if the value of the asset falls. This is the opposite of a more conventional " long" position, where the investor will profit if the value of ...
*
Position (finance)
In finance, a position is the amount of a particular security, commodity or currency held or owned by a person or entity.
In financial trading, a position in a futures contract does not reflect ownership but rather a binding commitment to buy ...
References
{{DEFAULTSORT:Long (Finance)
Financial markets
Securities (finance)
Stock market terminology