Position (finance)

Participants
Bond Commodity Derivatives Foreign exchange Money Over-the-counter Private equity Real estate Spot Stock
Investor institutional Retail Speculator

Instruments

Time deposit
(certificate of deposit)

Corporate

Personal

Public

Government spending
Final consumption expenditure Operations Redistribution Transfer payment
Government revenue
Taxation Deficit spending Budget (balance) Debt Non-tax revenue Warrant of payment

Banks and banking

Lists of banks

Regulation · Standards

Economic history

For other uses, see Position (disambiguation).

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

In derivatives trading or for financial instruments, the concept of a position is used extensively. There are two basic types of position: a long and a short.

Traded options will be used in the following explanations. The same principle applies for futures and other securities. For simplicity, only one contract is being traded in these examples.

Long position

When a trader buys an option contract that he is not short, he is said to be opening a long position.
When a trader sells an option contract that he is already long, 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

Short position

When a trader sells an option contract that he is not long, he is said to be opening a short position.
When a trader buys an option contract that he is already short, 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.

Net position

Net position is the difference between total open long (receivable) and open short (payable) positions in a given asset (security, foreign exchange currency, commodity, etc.) held by an individual. This also refers to 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.

References

Financial markets

Types of markets	Primary market Secondary market Third market Fourth market

Types of stocks	Common stock Golden share Preferred stock Restricted stock Tracking stock

Share capital	Authorised capital Issued shares Shares outstanding Treasury stock

Participants	Broker-dealer Day trader Floor broker Floor trader Investor Market maker Proprietary trader Quantitative analyst Regulator Stock trader

Exchanges	Electronic communication network List of stock exchanges Opening times Multilateral trading facility Over-the-counter

Stock valuation	Alpha Arbitrage pricing theory Beta Bid–ask spread Book value Capital asset pricing model Dividend discount model Dividend yield Earnings per share Earnings yield Net asset value Security characteristic line Security market line T-model

Trading theories and strategies	Algorithmic trading Buy and hold Concentrated stock Contrarian investing Day trading Dollar cost averaging Efficient-market hypothesis Fundamental analysis Growth stock Market timing Modern portfolio theory Momentum investing Mosaic theory Pairs trade Post-modern portfolio theory Random walk hypothesis Sector rotation Style investing Swing trading Technical analysis Trend following Value investing

Related terms	Block trade Cross listing Dark liquidity Dividend Dual-listed company DuPont analysis Efficient frontier Flight-to-quality Haircut Initial public offering Margin Market anomaly Market capitalization Market depth Market manipulation Market trend Mean reversion Momentum Open outcry Public float Public offering Rally Returns-based style analysis Reverse stock split Share repurchase Short selling Slippage Speculation Stock dilution Stock market index Stock split Trade Uptick rule Volatility Voting interest Yield

This article is issued from Wikipedia - version of the Monday, March 14, 2016. The text is available under the Creative Commons Attribution/Share Alike but additional terms may apply for the media files.