Loading the player...

DEFINITION of 'Bull Position'

A bull position is a long (positive) position in a security. A bull or long position seeks to profit from rising prices in certain securities. When prices rise, a bull position becomes increasingly profitable. If prices fall, the bull position decreases in value.

BREAKING DOWN 'Bull Position'

A bull or long position is the most well-known type of position and is typically used in "buy and hold" investing. Buy and hold is a strategy that entails an investor buying stocks and holding them for a long period, regardless of fluctuations in the market. Because of the investor’s commitment to the stock for an extended period of time, buy and hold strategies with bull positions require deep analysis on the part of the investor.

The investor will usually spend time researching the industry that the company is part of, other macroeconomic trends, as well as the intrinsic characteristics of the company itself, including its management, financial results, additional metrics of performance (e.g., weekly or monthly active users for a growing tech company), and financing, including leverage. An investor who employs a buy-and-hold strategy actively selects stocks yet is less concerned with short-term price movements and technical indicators.

Bull Position Versus Bear Position

A bull position is the opposite of a bear position. While a bull position is a trade or investment that an investor initiates in the hopes that the instrument's price will rise, an individual or institution will initiate a bear position (often called a short position), believing the security will fall in price. Bear positions are often riskier than bull positions and more difficult to get right. Short-selling puts the investor into a position of unlimited risk and a capped reward. For example, if an investor enters into a short position on a stock trading at $30, the most she or he can gain is $30 per share (stock to go to $0), while the most she or he can lose is infinite, since the stock can theoretically rise in price indefinitely.

Bull Position and Call Options

An alternative way to initiate a bull position can include buying call options. Call options give the holder (purchaser of the option) the right to buy 100 shares of an underlying stock at a specific price, known as the option’s strike price. The option is good up until a specified date, known as the expiration date. The premium of the call option is its market price. A call option can provide advantages such as flexibility, a lower initial cost, and potentially large gains. If at expiry the underlying asset is below the strike price, however, the call buyer loses the premium paid.

  1. Bull

    A bull is an investor who invests in a security expecting that ...
  2. Bull Bond

    A bull bond is likely to increase in value in a bull market as ...
  3. Bull Call Spread

    A bull call spread is used when a moderate rise in the underlying ...
  4. Bear Position

    Bear position is a term representing a short position applied ...
  5. Bull Trap

    A bull trap is a false signal indicating a declining trend in ...
  6. Long (or Long Position)

    A long (or long position) refers to the purchase of a security ...
Related Articles
  1. Insights

    How Bull Markets Past and Present Stack Up

    Looking back at the history of bull markets can give some context on where we currently stand.
  2. Insights

    Digging Deeper Into Bull And Bear Markets

    Discover why it's important to know the characteristics of bull and bear markets, the two types of market conditions.
  3. Trading

    Understanding Bull Spread Option Strategies

    Bull spread option strategies, such as a bull call spread strategy, are hedging strategies for traders to take a bullish view while reducing risk.
  4. Managing Wealth

    The 3 Best Investments When Bull Markets Slow Down

    Find out why no bull market lasts forever, and why investors should shift their assets away from growth and toward dividends when stocks slow down.
  5. Trading

    What is a Bull Call Spread?

    A bull call spread is an option strategy that involves the purchase of a call option and the simultaneous sale of another option.
  6. Financial Advisor

    The Current Bull Market Just Hit a Major Milestone

    The current bull market is now the second-longest in history. How does it stack up?
  7. Insights

    How Does this Bull Market Stack Up?

    If you haven't heard, the current bull market turned seven years old today, which is downright gray in market years.
  8. Trading

    Which Vertical Option Spread Should You Use?

    Knowing which option spread strategy to use in different market conditions can significantly improve your odds of success in options trading.
  9. Trading

    When Should I Sell A Put Option Vs A Call Option?

    Beginning traders often ask not when they should buy options, but rather, when they should sell them.
  1. What are common trading strategies used in a bull market?

    Discover four commonly used trading strategies by investors and analysts to make profits from a prolonged bull market, including ... Read Answer >>
  2. What's the difference between a long and short position in the market?

    Long positions in a stock portfolio refers to stocks that have been bought and are owned, whereas short positions are those ... Read Answer >>
  3. What is the difference between a covered call and a regular call?

    Learn what a call option is, what two strategies call options can be used for, and the difference between a covered call ... Read Answer >>
  4. When does one sell a put option, and when does one sell a call option?

    An investor would sell a put option if her outlook on the underlying was bullish, and would sell a call option if her outlook ... Read Answer >>
  5. 4 Ways to Trade Options

    Without a good understanding of option trading, terms like "buy to open", "sell to open", "buy to close", and "sell to close" ... Read Answer >>
Trading Center