Open Position

An open position is a trade that has been initiated but not yet closed or settled. When you buy shares or enter a futures contract, you have an open position. The position remains open until you sell the shares, close the futures contract, or the contract expires. Open positions expose you to market risk, as their value changes with price movements.

What Is an Open Position?

An open position means you have an active trade in the market. You have committed capital to a trade that has an outcome that is yet to be determined. The position is “open” to profit or loss based on future price movements.

Open positions can be:
– **Long**: you have bought an asset expecting it to rise
– **Short**: you have sold (short sold) an asset expecting it to fall

Open Positions in Different Asset Classes

**Equity**: you hold shares in your demat account that you have not yet sold.

**Futures**: you have a live futures contract. Open interest in futures refers to the total number of outstanding contracts.

**Options**: you hold an option contract (call or put) that you have bought or sold, and has not yet expired or been exercised.

**Currency**: a forex trade that is still active and not yet squared off.

Risks of Open Positions

– Overnight risk: positions held overnight are exposed to gap risk from news or events outside market hours
– Margin risk: open futures and options positions require ongoing margin maintenance
– Liquidity risk: positions in illiquid instruments may be difficult to exit at desired prices

Tracking Open Positions

Most brokers provide a dashboard showing all open positions with:
– Current market price
– Average entry price
– Unrealised profit or loss
– Current margin utilisation (for derivatives)

Practical Example

Deepak buys 500 shares of Infosys at Rs 1,800 and 1 lot of Nifty Futures at 22,000. He has two open positions:
1. 500 shares of Infosys (long equity)
2. 1 lot of Nifty Futures (long futures)

Both positions expose him to risk. If Nifty falls, his futures position will lose value and require additional margin. If Infosys falls, his equity position shows an unrealised loss. Both positions remain “open” until he closes them.

Key Takeaways

– An open position is an active trade that has been initiated but not yet closed
– It can be long (expecting price rise) or short (expecting price fall)
– Open positions expose the trader to market risk until they are closed
– Overnight open positions carry gap risk from after-hours events
– Brokers provide real-time tracking of all open positions including unrealised P&L