Position

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Position refers to the market commitment, or exposure, an investor or trader has made to a commodity or security, and is referred to as either a long (owned or bought) or a short (borrowed or sold) position. Such exposure is called an open position and becomes closed when the trader makes a transaction that removes the security/commodity.

In derivatives markets a naked (uncovered) position refers to an open long or short position the trader holds in a futures or options contract that doesn't have a opposite position in either the derivatives or the equity market. For example, a trader with call (sell) options in a stock is in a naked position if s/he doesn't have, for example, a long position in the underlying equity on the stock market.[1] Naked positions are also called uncovered or unhedged positions.

References

  1. Naked position. BusinessDictionary.com.