Bear Position

AAA

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.

INVESTOPEDIA EXPLAINS '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.

VIDEO

RELATED TERMS
  1. Bear Market Rally

    A period in which prices of stocks increase during a bear market. ...
  2. Bear

    An investor who believes that a particular security or market ...
  3. Bear Market

    A market condition in which the prices of securities are falling, ...
  4. Herd Instinct

    A mentality characterized by a lack of individual decision-making ...
  5. Rally

    A period of sustained increases in the prices of stocks, bonds ...
  6. David Einhorn

    Known for his short selling strategy, activist investor David ...
Related Articles
  1. When To Short A Stock
    Active Trading Fundamentals

    When To Short A Stock

  2. Bear Put Spreads: A Roaring Alternative ...
    Options & Futures

    Bear Put Spreads: A Roaring Alternative ...

  3. Short Sales For Market Downturns
    Fundamental Analysis

    Short Sales For Market Downturns

  4. Shorting ETFs: Profit Or Peril?
    Mutual Funds & ETFs

    Shorting ETFs: Profit Or Peril?

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center