Series 79: Long And Short Positions

Long and Short Positions

Investment strategies may involve taking long or short positions in securities. (Some investors, such as hedge funds, may pursue both strategies simultaneously.) A long position is the conventional investment strategy of buying a security with the expectation (or hope) that it will increase in value and can be sold at a profit. An investor who takes a long position has full ownership rights to the security in question. When an investor takes a long position in a derivative instrument, she profits when the value of the derivative rises, even if the value of the underlying asset has fallen (e.g., a put).

In con