Long vs Short Positions
Lavarage supports both long and short positions on any token with margin liquidity. This page explains the mechanics of each, when to use them, and how they differ under the hood.
Long Positions
You profit when the price goes up.
Mechanics
- You deposit margin (WSOL or USDC)
- The protocol borrows additional WSOL or USDC from a lending pool
- All funds are swapped via Jupiter into the target token
- You now hold real tokens worth your margin x leverage
- When you close, the tokens are sold back, the loan is repaid, and you keep the difference
Example: 3x Long SOL at $150
| Your margin | $150 (1 SOL) |
| Borrowed | $300 (2 SOL worth of USDC) |
| Position | ~3 SOL ($450 total) |
| SOL Price | Position Value | After Repay | Your P&L | ROI |
|---|---|---|---|---|
| $180 (+20%) | $540 | $540 - $300 - fees | ~+$90 | ~+60% |
| $150 (flat) | $450 | $450 - $300 - fees | ~-fees | ~-2% |
| $120 (-20%) | $360 | $360 - $300 - fees | ~-$90 | ~-60% |
At 3x leverage, a 20% price move becomes a ~60% move on your margin.
When to Go Long
- You expect the token price to increase
- You want to hold the actual token (not a synthetic contract)
- You want more buying power than your capital alone provides
Short Positions
You profit when the price goes down.
Mechanics
- You deposit margin (USDC)
- The protocol borrows the target token from a lending pool
- The borrowed tokens are immediately sold via Jupiter for USDC
- If the price drops, it costs less to buy them back
- When you close, the protocol buys back the tokens at the new price, repays the loan, and you keep the difference
Example: 3x Short TOKEN at $10
| Your margin | $100 USDC |
| Borrowed | 20 TOKEN ($200 worth) |
| Sold for | $200 USDC |
| Total short exposure | $300 |
| TOKEN Price | Cost to Buy Back | Gross P&L | ROI |
|---|---|---|---|
| $8 (-20%) | $160 | +$40 | ~+40% |
| $10 (flat) | $200 | -fees | ~-2% |
| $12 (+20%) | $240 | -$40 | ~-40% |
When to Go Short
- You expect the token price to decrease
- You want to hedge existing long exposure in your portfolio
- You see a token that's overvalued and want to profit from the correction
Short Risk: No Cap on Losses
With a long position, the worst case is the token goes to zero and you lose your margin. With a short, the token can theoretically rise indefinitely. In practice, your position gets liquidated before losses exceed your margin, but shorts at high leverage can get liquidated very quickly on a price spike.
Key Differences
| Long | Short | |
|---|---|---|
| Profit when | Price goes up | Price goes down |
| Margin token | WSOL or USDC | USDC |
| What's borrowed | Quote token (USDC/WSOL) | The target token itself |
| What you hold | Real target tokens | USDC (from selling borrowed tokens) |
| Max loss | Your margin (token goes to zero) | Your margin (liquidation triggers first) |
| Swap at open | Quote token -> target token | Target token -> USDC |
| Swap at close | Target token -> quote token | USDC -> target token (to repay) |
Combining Longs and Shorts
Experienced traders use both sides together:
- Hedge: Long on a token you believe in, short on a correlated token you think will underperform. If the whole market drops, your short offsets some of your long's losses.
- Pairs trade: Long SOL, short a SOL-beta token. You profit if SOL outperforms the other token, regardless of market direction.
- Rotation: Close longs and open shorts when you see momentum shifting. Lavarage lets you go both directions on the same token.
Availability
Short positions are currently in beta. Most major tokens support shorting. If the token search shows a "Short" option for a token, it's available. If not, shorting may not have margin liquidity for that token yet.
Next: Understand fees and interest to calculate your break-even points.
Updated 27 days ago