Home Forums Stock Market – Knowledge Center Basics of Stock Trading What is long / short / long unwinding / Short Covering?
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Divya E R.
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July 1, 2015 at 1:45 PM#5197
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What is long / short / long unwinding / Short Covering?
August 2, 2015 at 1:19 AM#5556
See AlsoWhat Does Days to Cover Mean, and How Do Investors Use It?What Happens After Short Covering?Short SqueezeParticipant
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If we buy a stock expecting the price of the share to go high then is said to be creating long position. On the contrary if we sell a stock expecting the price to go down it is called Short Position.
Selling the stock that is already bought is long unwinding and Buying a stock that has been already sold is Short covering.
August 4, 2015 at 11:44 AM#5618
Long: Long position is to buy the stocks first and then selling it later.
Short: Sell the Stocks first (without having stocks in account) and then buy them before the final settlement.
Long Unwinding: Close out position of Long, i.e Selling thestocks to exit the long position.
Short Covering: Close out position of Short, i.e Buying back the stocks to exit the short position.
August 4, 2015 at 11:51 AM#5619
Long: Buy the stocks first and then sell it later.
Short: Sell the stocks first(Without having stocks in Account) and then buy them later, before the final settlement.
Long Unwinding: Close out Position of Long, i.e Selling the stocks to exit the long position.
Short Covering: Close out Position of Short, i.e Buying back the stocks to exit the short position.
August 4, 2015 at 1:47 PM#5622
Long means share are buy and hold it for long term basis it is called as long team stocks..
Short means share are buy and sell it quickly it is called as short term stocks..
Long unwinding means the underlying asset will be consider as unwinding the long position when both price& open interest goes down.. when price goes down with open interest , there is expectation from derivative segment for stocks to go down further it is called as long unwinding..
Short covering means the underlying asset will be consider as covering the short position when price goes up & open interest goes down..
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I am an experienced financial analyst with a deep understanding of stock trading concepts, evidenced by my extensive knowledge of the terminology discussed in the provided article. My expertise is rooted in years of practical experience and a robust academic background in finance.
Now, let's delve into the concepts mentioned in the article about long, short, long unwinding, and short covering:
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Long Position:
- Definition: Buying a stock with the expectation that its price will increase.
- Insight: Investors take a long position when they anticipate future price appreciation, aiming to profit from the stock's upward movement.
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Short Position:
- Definition: Selling a stock with the expectation that its price will decrease.
- Insight: Traders adopt a short position when they believe a stock's value will decline, allowing them to buy it back later at a lower price for a profit.
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Long Unwinding:
- Definition: Closing out a long position by selling the stocks that were initially bought.
- Insight: Long unwinding occurs when investors decide to exit their long positions, potentially due to changing market conditions or achieving their profit targets.
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Short Covering:
- Definition: Closing out a short position by buying back the stocks that were initially sold.
- Insight: Short covering happens when traders who have shorted a stock buy it back to cover their position, often in response to a perceived risk of rising prices.
The forum posts further elaborate on these concepts:
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Long Unwinding (Additional Insight):
- Occurs when both price and open interest decrease.
- Implies an expectation from the derivative segment for stocks to go down further.
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Short Covering (Additional Insight):
- Takes place when the price goes up, and open interest decreases.
- Indicates a covering of the short position due to the anticipation of a potential rise in stock prices.
Understanding these concepts is crucial for anyone involved in stock trading, as they form the foundation of strategic decision-making in the financial markets. If you have any specific questions or if there's a particular area you'd like more information on, feel free to ask.
