- Position (finance)
In financial trading, a position is a binding commitment to buy or sell a given amount of financial instruments, such as securities, currencies or commodities, for a given price.
The term "position" is also used in the context of finance for the amount of securities or commodities held by a person, firm, or institution, and for the ownership status of a person's or institution's investments.
Trading and financial assets
- When a trader buys an option contract that he has not already written (i.e. sold), he is said to be opening a long position.
- When a trader sells an option contract that he already owns, he is said to be closing a long position.
- When a trader is 'long', he/she wins when the price increases, and loses when the price decreases.
- When a trader writes (i.e. sells) an option contract that he does not already own, he is said to be opening a short position.
- When a trader buys an option contract that he has written (i.e. sold), he is said to be closing a short position.
- When a trader is 'short', he/she wins when the price decreases, and loses when the price increases.
The long and the short of it is that: buyers are referred to as the long; and sellers are referred to as the short.
Net position is the difference between total open long (receivable) and open short (payable) positions in a given assets (security, foreign exchange currency, commodity, etc...) held by an individual. This also refers the amount of assets held by a person, firm, or financial institution as well as the ownership status of a person's or institution's investments.
Stock market Types of stocks Participants Exchanges Stock valuation Financial ratios Trading theories
and strategiesAlgorithmic trading · Buy and hold · Contrarian investing · Day trading · Efficient-market hypothesis · Fundamental analysis · Market timing · Modern portfolio theory · Momentum investing · Mosaic theory · Pairs trade · Post-modern portfolio theory · Random walk hypothesis · Style investing · Swing trading · Technical analysis · Trend following
Related termsBlock trade · Cross listing · Dark liquidity · Dividend · Dual-listed company · DuPont Model · Flight-to-quality · Haircut · IPO · Margin · Market anomaly · Market capitalization · Market depth · Market manipulation · Market trend · Mean reversion · Momentum · Open outcry · Public float · Rally · Reverse stock split · Share capital · Short selling · Slippage · Speculation · Stock dilution · Stock split · Trade · Uptick rule · Volatility · Voting interest · Stock market index
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