I understand the difference between a “call” and “put” , a log position and short position. What I don’t understand is how its used below:
“they could enter long positions and sell them at a higher price on or before a certain date, creating a put option in practice”.
I’m sure I’m missing the logic in the passage. How can you create a put option from a long position. Is he referring to a long call position?
I look forward to your feedback
“Greenspan and the Fed kept interest rates rather low to encourage growth in the stock markets. Investors assumed from this policy that stocks would continue to rise and, thus, they could enter long positions and sell them at a higher price on or before a certain date, creating a put option in practice, if not in contract. While this was likely not the intent of the Federal Reserve at this time, investors used this investment strategy anyway.”