What is Long Unwinding Meaning and How it works? [2023]

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Investing or trading in the stock market can be a great way to make money. However, it can be intimidating for those who are new to it. One of the most challenging aspects of stock market investing or trading is understanding the various terminology, such as call, put, unwinding, etc. These terms may feel overwhelming for beginners. So in this blog post, we will explore the long unwinding meaning.

However, before discussing the long unwinding in stock market, we need to understand other related terms to it. Let us begin!

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The stock market can be difficult to comprehend, and the futures and options segment is even more challenging to grasp. Due to its complexity, many people avoid trading in the futures and options segment.

Many people are perplexed by terms like call, put, options chain, open interest, theta, gamma, and so forth, making it a significant obstacle to beginning trading in futures and options.

Let us begin by discussing what exactly “unwinding” in the stock market is. Afterward, we can move on to how it works, as well as what call & put writing, and call unwinding are.

Unwinding Meaning in Stock Market

“Typically unwind meaning in English is to relax or to be free.”

And Unwinding Meaning in stock market is a process of closing a trading position in stock market. It is mainly used when trade is large or complex. “Unwinding” can also refer to selling and correcting a trading error, which can be complex or require multiple steps or trades to correct.

The word ‘Unwinding’ is mainly used when buying and selling happen in many transactions rather than once.

Example of Unwinding

Suppose a broker wanted to add a position but, by mistake, he placed a sell order. Then to fix this, the broker has to unwind that transaction by first buying the sold shares and then adding/ purchasing the shares which supposed to be added or purchased in the first place.

What is Call Writing?

Call writing means an agreement between two parties to buy or sell an asset or securities at a specified value/price on or before a specific date in the future.

The call writer must purchase or sell the asset or security at the strike price before the expiration date. And in exchange for entering into this contract, the writer of the call gets a premium amount.

Call options are usually written in lots for stocks and indices. For example, the one-lot size of TCS’s call option contracts is 150, meaning the contract is for 150 shares.

options contract

What is Put Writing?

Put writing means the holder of the put option possesses the privilege of selling a predetermined quantity by a specified date for the strike price, although it is not obligatory.

After the option is exercised, the Put writer must buy the underlying asset from the option holder. And the buyer pays a premium to put the writer.

What is Call Unwinding?

Call Unwinding Meaning:- When a trader attempts to close out their position in security by selling it, this is done when the trader believes the security is overvalued and wants to protect themselves from further losses or that the call option is hit the target price. The process of call unwinding can be done in various ways, including market orders or limit orders.

One possible explanation for why a call option might be unwound is that an error was made when writing the call or more lots need to be added. This data can be easily accessed daily from the official NSE India website.

nifty option chain

Example of call unwinding

Suppose Mr. A has entered into a contract in call option of Tata Consultancy Services ltd, at RS 3260, and thinks of a target price for RS 3270 before expiry. However, the stock price hits RS 3280 before one day of expiry. So Mr. X can sell the position after getting the target price. This is known as the call unwinding.

If the price of Tata Consultancy Services ltd drops below RS 3260 before or on the expiry date, Mr. A must close out their call position.

How Unwinding Works

The term “unwinding” describes closing out trades that require multiple transactions, trades, or steps that have taken a certain amount of time. For example, if a trader takes a long position in stocks while simultaneously selling puts of the same stock, they will need to unwind those trades at some point. This involves examining the choices available and then selling the original stocks. The same processes a broker could follow if he attempts to correct the buying or selling error.

In short, unwinding is a process of reversing or closing a trade by participating in an offsetting transaction.

Long Unwinding Meaning

“Long unwinding” is a term used in trading and investing. It refers to selling a stock or derivative that you have been holding with the expectation that its price will increase. This can be done to make a profit or to reduce potential losses. In simpler terms, long unwinding is the process of getting out of a long position in a stock or other investment.


To enter the futures and options market, you must understand critical terms such as call writing, put writing, etc. This knowledge is essential for trading within this segment, as it can be risky, especially for those just starting. Learning about how these terms work is necessary to make the most of your trading experience.

I hope I was able to explain long unwinding meaning and terms related to it. Let me know your thoughts in the comment box below.

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Frequently Asked Questions long unwinding meaning

Long unwinding meaning in Share Market?

Long unwinding means when the investor sells the position in futures & options of underlying assets or stock held by them in the expectation that the stock price will increase. Either to make a profit or to correct trade errors.

What is call writing?

Call writing means an agreement between two parties to buy or sell an asset or securities at a specified value/price on or before a specific date in the future.

What is unwinding meaning in Hindi?

अनवाइंडिंग का अर्थ स्टॉक मार्केट में ट्रेडिंग स्थिति को बंद करने की एक प्रक्रिया है। इसका मुख्य रूप से उपयोग तब किया जाता है जब व्यापार बड़ा या जटिल होता है।

What is unwinding meaning in Tamil?

பங்குச் சந்தையில் அன்வைண்டிங் மீனிங் என்பது பங்குச் சந்தையில் ஒரு வர்த்தக நிலையை மூடும் செயல்முறையாகும். வர்த்தகம் பெரியதாகவோ அல்லது சிக்கலானதாகவோ இருக்கும்போது இது முக்கியமாகப் பயன்படுத்தப்படுகிறது.

What is unwinding meaning in Marathi?

स्टॉक मार्केटमधील अनवाइंडिंग म्हणजे स्टॉक मार्केटमधील ट्रेडिंग पोझिशन बंद करण्याची प्रक्रिया आहे. जेव्हा व्यापार मोठा किंवा गुंतागुंतीचा असतो तेव्हा ते प्रामुख्याने वापरले जाते.


An aspiring Finance student became obsessed with the stock market and decided to help beginners learn about it more easily. Created a website that would provide strategies and technical knowledge on how to get started in the stock market.

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