I have some burning questions for a long time, and wonder if you please could answer it for me. 1. When I hear: to go 'long', or 'short', is that used for options only, or can that be applied for stocks as well? 2. What time frame is considered to go 'short', or 'long'? 3. When one goes 'short' (if that word is applied for stocks), are all the shares sold, or only part of it? (June 7, 2001)
The terms apply to both stock and options. You can go 'long' either, i.e., buy them. Or you can go short, i.e., sell them without owning them. If you go long you come out of pocket with cash to buy. If you go short you are selling, that is putting money into your account. When looking at time frames, on stock it does not matter. On options, the expiration period is the key. Options expire the third Saturday of each month and both your long and short option trades are keyed off of this. If you buy or go long an option, time is your enemy; if you sell or go short an option, time is your friend because time decay reduces the value of the option you sold and you can buy it back cheaper. There is much more to these different strategies and we cover buying and selling options in the Options You can Use seminar.
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