About Options Positions

In the world of trading, a position refers to the actual securities or other financial instruments that are held in an account that together represents a coherent search strategy. A position can also refer to the buying or selling of a block of securities or other financial instruments. In options trading, a position means the same thing. A trader or investor might be long 500 shares of XYZ and short 2 XYZ April 70 calls. This is his or her position in XYZ.

Markets are referred to as bullish, bearish, or neutral. These terms are also used to describe positions and search strategies. A bullish market is one whose trend is moving upward. If you are bullish on a particular market, you believe that market will increase in value. In fact, that market might already be experiencing an upward trend, which you believe will continue for a period of time. Conversely, a bearish market is one moving in a downward trend. When you are bearish on a particular market, you believe this market is decreasing in value, or it might already be moving downward and you think this downward trend will continue for a period of time. A neutral market is one that is not moving either up or down significantly.

Two elementary terms essential to options trading are holder and writer. The holder is the buyer of the option and is the one who has the right to buy or sell a fixed number of the underlying asset at a fixed price. The writer is the seller of the option and is the one who has an obligation to sell a fixed number of the underlying asset at a fixed price.