A Long, or a long position, is an investment term that relates to securities such as currency, commodity, and stocks. Individuals that take the long position believe that the market will improve in the near future. The opposite of taking the long position is short position.
Explanation of Long (or Long Position)
Investors that take the long position buy security with the expectation that its value will rise in the future. The investor will wait for the market to rise to a certain extent, and then sell the commodity at the market to earn profits.
Long position is generally taken during bullish market condition, while the short position is taken during bearish market condition.
Taking the long position contrasts with the short position in the sense that the owner owns the stock with his or her own money. The security is not bought using borrowed money with the intention of selling it to pay back the loan amount and earn profit as well. In long position the investors buy the security using their own resources, while in the short position the investor buys the properties using borrowed amount.
A simple example can help in understanding this concept. Suppose that an individual buys 50 shares of ABC Company by investing a certain amount of money. The person buys the security with the intention of selling the same when the market condition turns favorable. This individual is said to have taken a long position. Once the market turns favorable the individual will sell the security and earn profits.
Long position has a slightly different meaning when it comes to option contracts. The long position in such a situation occurs when the individual buys or hold a call or put option. This gives the individual the right to buy or sell the option at a specific future date. On the other hand, a short position occurs when the individual sell a call or put option. In this case the individual owes to the holder to buy or sell the security at a future time period that is specified by the holder.
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