Overview

open position


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A situation when a trader in securities, commodities, or currencies is at risk if market prices rise or fall. This may involve selling for future delivery items not either held or hedged by contracts to buy, in which case the trader will make a loss if market prices rise, or contracting to buy without hedging by contracts to sell, in which case the trader will make a loss if market prices fall. An open position is contrasted with covered arbitrage, where contracts are balanced and the trader is not exposed to risk of loss through price changes.

Subjects: Economics.


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