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What Is a Long Position? Definition, Examples & Related Terms

In investing, being long on an asset means owning it and expecting its value to go up.
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The meaning of "long" can vary slightly depending on context. 

What Does “Long” Mean in Investing?

In the world of finance and investing, the term “long” gets tossed around quite a bit, and unfortunately, it can mean different things in different contexts, so it’s important for investors to understand which definition should be applied in which case.

In virtually every case, however, the holder of a long position in a security expects that that security will go up in price.

Long vs. Short: What’s the Difference?

The opposite of a long position is a short position. Whereas the holder of a long position expects that a security will go up in value, the holder of a short position expects the opposite—that the security in question will go down in price.

What Does It Mean to Be Long on a Stock or Investment?

The simplest and most common use of “long” in investing has to do with non-derivative securities (securities that do not derive their value from the price movement of an underlying asset). This type of security represents direct ownership of an asset—examples include stocks, ETFs, mutual funds, bonds, and commodities.

If an investor is long on a stock (or bond, or commodity), it means that they own it, believe it will go up in value, and plan to hold for the long term to take advantage of this.

Any time a buy-and-hold investor (not a trader) purchases a security, they become long on that security. For instance, if an investor researched Proctor & Gamble, decided it had good fundamentals, and purchased 50 shares in the hopes thaty the stock would go up in value, they would be “long 50 shares of Proctor & Gamble.”

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TheStreet Dictionary Terms

What Does It Mean to Be Long on an Options Contract?

Options contracts are derivative securities, meaning they derive their value from the price movement of an underlying asset—usually a stock. Someone who is long on an options contract expects the contract (not necessarily 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 on or before a specific expiration date.

The value of a call option goes up as the underlying stock goes up in price. Therefore, if an investor is long on a call option, they own the contract and believe the price of the underlying stock—and therefore the premium (value) of the option—will go up. In other words, someone who is long on a call option is bullish about the underlying stock.

For example, if an individual believed that the price of Pepsi stock was going to go up, they could initiate a long call by buying a call option for 100 shares of Pepsi with a strike price equal to Pepsi’s current stock price that expires in two months. If 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, on the other hand, is a contract that gives its buyer the option to sell a stock at a specific strike price on or before a specific expiration date.

The value of a put option goes up as the underlying stock goes down in price. Therefore, if an investor is long on a put option, they own the contract and believe the price of the underlying stock will go down, and therefore, the premium (value) of the option will go up. In other words, someone who is long on a put contract is bearish on the underlying stock.

For example, if an individual believed that the price of Airbnb stock was going to go down, they could initiate a long put by buying a call option for 100 shares of Airbnb with a strike price equal to Airbnb’s current stock price that expires in two months. If 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 Does It Mean 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 for a pre-determined price on a particular date and obliges the other party to sell it to them. Futures are most often used to “lock in” the current price of a commodity the purchasing party believes will cost more in the future.

When an investor buys a futures contract to lock in the current price of a commodity because they believe the commodity will cost more in the future is said to be long on that futures contract. For instance, if a bread company believed the price of wheat was going to rise over the next six months due to supply-chain issues, they might initiate a long position by entering a futures contract that ensures delivery of a certain amount of wheat six months in the future at today’s price to make sure they could still manufacture bread in the future without increasing their costs.