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In finance, alongposition in afinancial 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.[1] This is known as abullish position. The term "long position" is often used in context of buyingoptions contracts.[2]
When an investor holds a long position in a stock they are buying ashare of ownership in a company.[3] Depending on the type of Stock purchased this can entitle the shareholder to voting rights at shareholder meetings or dividend payments.
In terms of asecurity, such as astock or abond, or equivalentlyto 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[4] a security is the more conventional practice ofinvesting.
Going long in afuture means the holder of the position is obliged to buy the underlying instrument at the contract price at expiry.[5] 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.
Anoptions investor goes long in an underlying investment (in technical jargon, the preposition "in" is omitted) by buyingcall options or sellingput 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.[6] If the price rises to above thestrike price, 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.
