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Ask the Institute

DATE: March 17, 2014

QUESTION:

Can you please define the term long? It seems that traders use the term long in different ways.

ANSWER:
A trader can use the term long in one of two ways. First, the term long can refer to owning something. If a trader is "long stock," this means that he or she owns stock. Similarly, if a trader is "long calls" or "long puts," then he or she owns call options or put options.

Second, the term long can refer to a bullish position, which is designed to profit if the market rises in price. "Long stock" and "long calls," which refer to owning stock or owning calls, are bullish positions since they tend to profit when stock prices rise. A short put is also considered a bullish position. To learn more about the term long, view this segment of "Ask the Institute."


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