Position (finance)

Amount of a certain security, commodity or currency held or owned by a person/entity In finance, a position is the amount of a particular security, commodity or currency held or owned by a person or entity. In financial trading, a position in a futures contract does not reflect ownership but rather a binding commitment to buy or sell a given number of financial instruments, such as securities, currencies or commodities, for a given price. Trading and financial assets In derivatives trading or for financial instruments, the concept of a position is used extensively. There are two basic types of position: a long (holding a positive amount of the instrument) and a short (holding a negative amount of the instrument). Generally speaking, long positions stand to gain from a rise of the price of the instrument and short positions from a fall (but with options the situation is more complicated). Options will be used in the following explanations. The same principle applies for futures and other securities. For simplicity, only one contract is being traded in these examples. Long position When a trader buys an option contract that they are not short, they are said to be opening a long posit