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KembaraXtra – Islamic Derivatives: Long Position & Short Position (Simple Explanation)
🔹 What is a Long Position?
👉 A long position means you agree to buy an asset in the future.
🔸 Example (Palm Oil 🌴)
👉 If price rises to RM4,500:
👉 If price falls to RM3,500:
🔹 What is a Short Position?
👉 A short position means you agree to sell an asset in the future.
🔸 Example (Palm Oil 🌴)
👉 If price drops to RM3,500:
👉 If price rises to RM4,500:
🔹 Key Difference
🔹 Simple Memory Trick
🔹 Simple Summary
🔹 What is a Long Position?
👉 A long position means you agree to buy an asset in the future.
- You expect the price to go up 📈
- You profit when prices increase
🔸 Example (Palm Oil 🌴)
- You agree to buy at RM4,000
👉 If price rises to RM4,500:
- You gain RM500 ✅
👉 If price falls to RM3,500:
- You lose RM500 ❌
🔹 What is a Short Position?
👉 A short position means you agree to sell an asset in the future.
- You expect the price to go down 📉
- You profit when prices decrease
🔸 Example (Palm Oil 🌴)
- You agree to sell at RM4,000
👉 If price drops to RM3,500:
- You gain RM500 ✅
👉 If price rises to RM4,500:
- You lose RM500 ❌
🔹 Key Difference
- Long position → Buy → profit if price goes up 📈
- Short position → Sell → profit if price goes down 📉
🔹 Simple Memory Trick
- Long = Buy (think: “I want price to go long ↑”)
- Short = Sell (think: “I benefit if price goes short ↓”)
🔹 Simple Summary
- Long = betting price will increase
- Short = betting price will decrease
- Both are opposite sides of a futures contract
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