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This week's question:
DATE: March 03, 2014
Can you define the term "bullish" and explain what it means for an investor to be "bullish" on the market?
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."