Bear Position


DEFINITION of 'Bear Position'

Alternate term for a short position in a financial security. A bear position attempts to profit in a market by betting that prices will fall for certain securities. The short seller borrows securities in the hopes that prices will decline. When the price drops, the investor makes a profit on the price change. When the price rises, the investor loses money. There are also numerous alternative ways to initiate bear positions such as buying put options or buying inverse ETFs.


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BREAKING DOWN 'Bear Position'

A bear position is the opposite of a bull position. A bear position is a trade or investment that is made in the hopes that the security's price will drop. If a short sale moves against the investor or trader, the trader may be exposed to unlimited losses since the price of the security can continue to rise. This is in contrast to a long position where the price of the security can move against the investor only a certain amount; that is, to zero. The use of alternative strategies to initiate a bear position can mitigate some of these risks.

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