What is the difference between "going long" and "going short". Is going short allowed
in all derivative markets.
"Going long" and "going short" are terms used in trading financial markets, particularly in derivative markets.
Going long refers to buying a financial asset in the hope that its price will rise in the future. This is a traditional way of investing, where an investor buys an asset with the expectation that it will increase in value over time.
Going short, on the other hand, refers to selling a financial asset that the trader does not actually own, with the intention of buying it back at a lower price in the future. This is essentially betting that the price of the asset will decrease.
While going long is allowed in all derivative markets, going short may be restricted or subject to additional requirements in some markets. This is because going short involves selling assets that the trader does not own, which creates a risk of unlimited losses if the price of the asset rises significantly. Therefore, some regulators may impose restrictions on short selling to prevent excessive speculation and market manipulation. Investors should check the rules and regulations of the specific derivative market they are trading in to determine if going short is allowed and what requirements may apply.