Long Position

A long position refers to the purchase of a security or asset with the expectation that its price will rise, allowing the investor to sell it later for a profit. In equities, a long position means owning shares of a stock, while in options, a long position involves holding a call option. Long positions are common in bullish markets, where investors are confident that the asset’s price will appreciate over time.

Example

An investor buys 100 shares of Apple Inc. with the expectation that the stock price will increase, holding a long position in the stock.

Key points

• Refers to buying a security with the expectation that its price will increase.

• Common in bullish markets, where investors are optimistic about future price growth.

• Can apply to stocks, options, commodities, or other financial assets.

Quick Answers to Curious Questions

What is the goal of a long position?

The goal is to profit from an increase in the asset’s price, selling it later at a higher price.

How does a long position differ in stocks vs. options?

In stocks, a long position means owning shares, while in options, it involves holding a call option with the expectation of a price increase.

When do investors take long positions?

Investors take long positions when they are optimistic about an asset’s future price performance.