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Moii Chavate made post

What are the different types of positions that one can take in the futures and options market in India currently?

Answer
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Sam Eswaran answered.
9 months ago


As a market participant, you will always deal with certain terms like long, short and open positions in the market. Let us understand the meanings of commonly used terms and what various positions in the F&O market actually imply.

Long position

Outstanding/ unsettled buy position in a contract is called “Long Position”. For instance, if Mr. X buys 5 contracts on Sensex futures then he would be long on 5 contracts on Sensex futures. If Mr. Y buys 4 contracts on Pepper futures then he would be long on 4 contracts on pepper.

Short Position

Outstanding/ unsettled sell position in a contract is called “Short Position”. For instance, if Mr. X sells 5 contracts on Sensex futures then he would be short on 5 contracts on Sensex futures. If Mr. Y sells 4 contracts on Pepper futures then he would be short on 4 contracts on pepper.

Open position

Outstanding/ unsettled either long (buy) or short (sell) position in various derivative contracts is called “Open Position”. For instance, if Mr. X shorts say 5 contracts on Infosys futures and longs say 3 contracts on Reliance futures, he is said to be having open position, which is equal to short on 5 contracts on Infosys and long on 3 contracts of Reliance. If next day, he buys 2 Infosys contracts of same maturity, his open position would be – short on 3 Infosys contracts and long on 3 Reliance contracts.

Naked and calendar spread positions

Naked position in futures market simply means a long or short position in any futures contract without having any position in the underlying asset. Calendar spread position is a combination of two positions in futures on the same underlying - long on one maturity contract and short on a different maturity contract. For instance, a short position in near month contract coupled with a long position in far month contract is a calendar spread position. Calendar spread position is computed with respect to the near month series and becomes an open position once the near month contract expires or either of the offsetting positions is closed.

A calendar spread is always defined with regard to the relevant months i.e. spread between August contract and September contract, August contract and October contract and September contract and October contract etc.

Opening a position

Opening a position means either buying or selling a contract, which increases client’s open position (long or short).

Closing a position

Closing a position means either buying or selling a contract, which essentially results in reduction of client’s open position (long or short). A client is said to be closed a position if he sells a contract which he had bought before or he buys a contract which he had sold earlier.


user profile image
Sam Eswaran answered.
9 months ago


As a market participant, you will always deal with certain terms like long, short and open positions in the market. Let us understand the meanings of commonly used terms and what various positions in the F&O market actually imply.

Long position

Outstanding/ unsettled buy position in a contract is called “Long Position”. For instance, if Mr. X buys 5 contracts on Sensex futures then he would be long on 5 contracts on Sensex futures. If Mr. Y buys 4 contracts on Pepper futures then he would be long on 4 contracts on pepper.

Short Position

Outstanding/ unsettled sell position in a contract is called “Short Position”. For instance, if Mr. X sells 5 contracts on Sensex futures then he would be short on 5 contracts on Sensex futures. If Mr. Y sells 4 contracts on Pepper futures then he would be short on 4 contracts on pepper.

Open position

Outstanding/ unsettled either long (buy) or short (sell) position in various derivative contracts is called “Open Position”. For instance, if Mr. X shorts say 5 contracts on Infosys futures and longs say 3 contracts on Reliance futures, he is said to be having open position, which is equal to short on 5 contracts on Infosys and long on 3 contracts of Reliance. If next day, he buys 2 Infosys contracts of same maturity, his open position would be – short on 3 Infosys contracts and long on 3 Reliance contracts.

Naked and calendar spread positions

Naked position in futures market simply means a long or short position in any futures contract without having any position in the underlying asset. Calendar spread position is a combination of two positions in futures on the same underlying - long on one maturity contract and short on a different maturity contract. For instance, a short position in near month contract coupled with a long position in far month contract is a calendar spread position. Calendar spread position is computed with respect to the near month series and becomes an open position once the near month contract expires or either of the offsetting positions is closed.

A calendar spread is always defined with regard to the relevant months i.e. spread between August contract and September contract, August contract and October contract and September contract and October contract etc.

Opening a position

Opening a position means either buying or selling a contract, which increases client’s open position (long or short).

Closing a position

Closing a position means either buying or selling a contract, which essentially results in reduction of client’s open position (long or short). A client is said to be closed a position if he sells a contract which he had bought before or he buys a contract which he had sold earlier.