A long position in finance refers to the situation where an investor or trader owns an asset with the expectation that its value will increase over time. It involves buying a security, such as a stock, bond, or commodity, with the belief that its price will rise in the future, allowing the investor to sell it at a profit.
For example, if someone buys shares of a company with the anticipation that the stock price will go up, they are said to have taken a long position. This strategy is often used by investors who have a positive outlook on the market or a particular asset.
In contrast, a short position involves the sale of an asset that the seller does not actually own, with the intention of buying it back at a lower price in the future. This is a bet on the asset’s price decreasing.