Ask the Institute

DATE: March 03, 2014

QUESTION:

Can you define the term "bullish" and explain what it means for an investor to be "bullish" on the market?

ANSWER:
The term "bullish" has two distinct, yet related meanings. First, the term "bullish" describes a general feeling an investor may have that a particular stock or market index will rise in price. And, second, "bullish" can be used to describe a position that increases in value when the price of the underlying security rises in price.

A person, for example, is considered "bullish on the market" or "bullish on a particular stock" if he or she thinks the market or a particular stock will rise in price in the near future. Examples of "bullish positions" are long stock, long a call option and short a put option because these positions tend to profit if the underlying security rises in price. To learn more about the term bullish, view this segment of "Ask the Institute."