What does 'taking a position' mean?

The phrase taking a position is used when an investor buys into/ invests in a security/ contract. It refers to when an amount of money is committed to an investment in anticipation of more favourable price movements. 

There are two types of positions: 

1. Long Positions/Buying Long- When you buy a security/ contract, anticipating an upward trend in its price, so as to sell at a higher rate and make profits. They include both intraday and delivery trades.

2. Short Positions/Short Selling- This involves selling securities you don't own. 
  • Intraday Trades- Your broker lends you the securities, and they must be repurchased by the end of the trading day (to return them to the broker). This is done in anticipation of prices falling, so as to earn profits by purchasing these stocks at a lower price than they were sold for. The investor bears the risk of unfavourable price movements and potential losses incurred while repurchasing the securities. 
  • Delivery-based Trades-  Selling is allowed only using the Securities Lending & Borrowing (SLB) mechanism. 
  • Futures and Options (F&O)- Sell positions can be taken intraday and be carried forward.

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