when a trader buys or holds a call options contract from an options writer they are long due to the power they hold in being able to buy the asset an investor who is long a call option is one who buys a call with the expectation that the underlying security will increase in value the long position call holder believes the asset s value is rising and may decide to exercise their option to buy it by the expiration date 
but not every trader who holds a long position believes the asset s value will increase the trader who owns the underlying asset in their portfolio and believes the value will fall can buy a put option contract they still have a long position because they have the ability to sell the underlying asset they hold in their portfolio the holder of a long put option believes the price of an asset will fall they hold the option with the hope that they will be able to sell the underlying asset at an advantageous price by the expiry so as you can see the long position on an options contract can express either a bullish or bearish sentiment depending on whether the long contract is a put or a call in contrast the short position on an options contract does not own the stock or other underlying asset but borrows it with the expectation of selling it and then repurchasing it at a lower price investors and businesses can also enter into a long forward or futures contract to hedge against adverse price movements a company can employ a long hedge to lock in a purchase price for a commodity that is needed in the future futures differ from options in that the holder is obligated to buy or sell the underlying asset they do not get to choose but must complete these actions suppose a jewelry manufacturer believes the price of gold is poised to turn upwards in the short term the firm can enter into a long futures contract with its gold supplier to purchase gold in three months from the supplier at 1 300 in three months whether the price is above or below 1 300 the business that has a long position on gold futures is obligated to purchase the gold from the supplier at the agreed contract price of 1 300 the supplier in turn is obligated to deliver the physical commodity when the contract expires speculators also go long on futures when they believe the prices will go up they don t necessarily want the physical commodity as they are only interested in capitalizing on the price movement before expiry a speculator holding a long futures contract can sell the contract in the market pros and cons of a long positionlocks in a pricelimits lossesdovetails with historic market performancesuffers in abrupt price changes short term movesmay expire before advantage is realizedexample of a long positionfor example let s say jim expects microsoft corporation msft to increase in price and purchases 100 shares of it for his portfolio jim is therefore said to be long 100 shares of msft now let s consider a nov 17 call option on microsoft msft with a 75 strike price and 1 30 premium if jim is still bullish on the stock he may decide to purchase or go long one msft call option one option equates to 100 shares instead of purchasing the shares outright as he did in the previous example at expiry if msft is trading above the strike price plus the premium paid 75 1 30 jim will exercise his right to buy on his long option to purchase 100 shares of msft at 75 the writer of the options contract the short position that jim bought must sell him the 100 shares at the 75 price taking a long position does not always mean that an investor expects to gain from an upward movement in the price of the asset or security in the case of a put option a downward trajectory in the price of the security is profitable for the investor let s say another investor jane currently has a long position in msft for 100 shares in her portfolio but is now bearish on it she takes a long position on one put option the put option is trading for 2 15 and has a strike price of 75 set to expire on nov 17 at the time of expiry if msft drops below the strike price minus the premium paid 75 2 15 jane will exercise the long put option to sell her 100 msft shares for the strike price of 75 in this case the option writer must buy jane s shares at the agreed upon 75 price even if the shares are trading at less on the open market 