Meaning of Call, Put, Buy, Sell, Short, Long in trading - difference
What is the meaning of Call and Put, Buy and Sell, Short and Long in trading ? What is the difference between them ?
It might look that meaning of call is the same as meaning of Buy or Long, but there is a difference. Also in case of Put, Sell and Short. In investing, some of these terms are usually used in different situations.
- Buy / Sell - you are buying something (for example stock or other security) to sell it later. The aim is to sell the security at expected price to realize a profit.
- Long position - you own a positive amount of the financial instrument. The expectation is that the financial instrument will increase its value. Long position is also known as a bull or bullish position.
- Short position - is the opposite of Long position. You will profit when the value of the financial instrument falls, so the expectation is that the financial instrument will decrease its value. Short position is also known as a bear or bearish position. It can be achieved for example through CFD (contract for difference).
- Call - is a term used in option trading. A call is an option contract, that gives the owner the right, but not the obligation, to buy a specified amount of an underlying security at a specified price within a specified time. So contract owner can decide to buy or not buy an underlying security at specified conditions.
- Put - is a term used in option trading. A put is an option contract, that gives the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time.