Position liquidation
The closing out of a long position. The term is sometimes used to denote closing out a short position, but this is more often referred to as covering. |
Similar financial terms
Overnight positionTrader's long or short position in a currency at the end of a trading day.
Take a position
To buy or sell short; that is, to have some amount that is owned or owed on an asset or derivative security.
Short position
Occurs when a person sells stocks he or she does not yet own. Shares must be borrowed, before the sale, to make "good delivery" to the buyer. Eventually, the shares must be bought to close out the transaction. This technique is used when an investor believes the stock price will go down.
Position diagram
Diagram showing the possible payoffs from a derivative investment.
Position
A market commitment; the number of contracts bought or sold for which no offsetting transaction has been entered into. The buyer of a commodity is said to have a long position and the seller of a commodity is said to have a short position .
Open position
A net long or short position whose value will change with a change in prices.
Modigliani and Miller Proposition II
A proposition by Modigliani and Miller which states that the cost of equity is a linear function of the firm's debt/equity-ratio.
Modigliani and Miller Proposition I
A proposition by Modigliani and Miller which states that a firm cannot change the total value of its outstanding securities by changing its capital structure proportions. Also called the irrelevance proposition.
Long position
An options position where a person has executed one or more option trades where the net result is that they are an "owner" or holder of options (i. e. the number of contracts bought exceeds the number of contracts sold). Occurs when an individual owns securities. An owner of 1,000 shares of stock is said to be "Long the stock."
Limitation on asset dispositions
A bond covenant that restricts in some way a firm's ability to sell major assets.
Changes in Financial Position
Sources of funds internally provided from operations that alter a company's cash flow position: depreciation, deferred taxes, other sources, and capital expenditures.
Clear a position
To eliminate a long or short position, leaving no ownership or obligation.
Composition
Voluntary arrangement to restructure a firm's debt, under which payment is reduced.
Liquidation value
Net amount that could be realized by selling the assets of a firm after paying the debt.
Liquidation rights
The rights of a firm's securityholders in the event the firm liquidates.
Liquidation
When a firm's business is terminated, assets are sold, proceeds pay creditors and any leftovers are distributed to shareholders. Any transaction that offsets or closes out a Long or short position.
Liquidation Preference
Sometimes, usually by virtue of an agreement, certain shareholders will receive preferential treatment if a company is liquidated. Investors may insist on this so that if a company fails, they are paid out first before any other shareholders receive any payouts.
