What's the significance here in Investing?
In the world of finance and investing, the term "long" gets thrown around a considerable amount, and sadly, it can mean various things in various settings, so investors must comprehend which definition ought to be applied in which case.
In basically every case, nonetheless, the holder of a long position in a security expects that that security will get more expensive.
Long versus Short: What's the Difference?
Something contrary to a long position is a short position. While the holder of a long position expects that a security will go up in value, the holder of a short position anticipates the inverse — that the security being referred to will go down in price.
What's the significance here to Be Long on a Stock or Investment?
The least complex and most common utilization of "long" in investing has to do with non-derivative securities (securities that don't get their value from the price movement of an underlying asset). This type of security addresses direct ownership of an asset — models incorporate stocks, ETFs, mutual funds, bonds, and commodities.
Assuming that an investor is long on a stock (or bond, or commodity), it means that they own it, accept it will go up in value, and plan to hold for the long term to exploit this.
Any time a buy-and-hold investor (not a trader) purchases a security, they become long on that security. For example, assuming an investor explored Proctor and Gamble, concluded it had great fundamentals, and purchased 50 shares in the expectations thaty the stock would go up in value, they would be "long 50 shares of Proctor and Gamble."
What's the significance here to Be Long on an Options Contract?
Options contracts are derivative securities, meaning they get their value from the price movement of an underlying asset — generally a stock. Somebody who is long on an options contract anticipates the contract (not really the underlying stock) to go up in value.
On a Call Option
A call option is a contract that gives its buyer the option to buy a stock at a specific strike price prior to a specific expiration date.
The value of a call option goes up as the underlying stock goes up in price. In this way, in the event that an investor is long on a call option, they own the contract and trust the price of the underlying stock — and thusly the premium (value) of the option — will go up. At the end of the day, somebody who is long on a call option is bullish about the underlying stock.
For instance, if an individual trusted that the price of Pepsi stock planned to go up, they could start a long call by buying a call option for 100 shares of Pepsi with a strike price equivalent to Pepsi's current stock price that lapses in two months. In the event that Pepsi stock goes up, the option holder could resell the contract for a profit. In this case, the contract's value goes up when the stock's value goes up.
On a Put Option
A put option, then again, is a contract that gives its buyer the option to sell a stock at a specific strike price at the latest a specific expiration date.
The value of a put option goes up as the underlying stock goes down in price. In this manner, in the event that an investor is long on a put option, they own the contract and accept the price of the underlying stock will go down, and consequently, the premium (value) of the option will go up. At the end of the day, somebody who is long on a put contract is bearish on the underlying stock.
For instance, on the off chance that an individual accepted that the price of Airbnb stock planned to go down, they could start a long put by buying a call option for 100 shares of Airbnb with a strike price equivalent to Airbnb's current stock price that lapses in two months. In the event that Airbnb stock goes down, the option holder could resell the contract for a profit. In this case, the contract's value goes up when the stock's value goes down.
What's the significance here to Be Long on a Futures Contract?
Like options, futures contracts are derivative securities. A futures contract obliges one party to buy a certain amount of a commodity at a pre-determined cost on a specific date and obliges the other party to sell it to them. Futures are most frequently used to "lock in" the current price of a commodity the purchasing party accepts will cost more from now on.
At the point when an investor buys a futures contract to lock in the current price of a commodity since they accept the commodity will cost more in what's in store is supposed to be long on that futures contract. For example, assuming a bread company accepted the price of wheat planned to rise over the course of the next six months due to production network issues, they could start a long position by entering a futures contract that guarantees delivery of a certain amount of wheat six months in the future at the present price to ensure they might in any case fabricate bread in the future without expanding their costs.
- Being long on a stock or bond investment is a measurement of time.
- A long position is something contrary to a short position.
- A long — or a long position — alludes to the purchase of an asset with the expectation it will increase in value — a bullish disposition.
- In options, being long can allude either to outright ownership of an asset or being the holder of an option on the asset.
- A long position in options contracts shows the holder claims the underlying asset.
How is a Long Different from a Short?
A short position is something contrary to a long position, in that it profits when the prices of securities go down.
Where Can a Long Position Be Used?
Investors can lay out long positions in securities like stocks, mutual funds, or some other asset or security. In reality, long is an investing term that can have various meanings relying upon in what setting it is utilized. Holding a long position is a bullish view in many examples with the exception of put options.