Also found in: Dictionary
of a security
, or the state of having sold one or the other. It is important to note that a short position is not closed, and is applied only to sales where further action may be required. For example, one who has borrowed securities
and has then sold them is said to be have a short position with respect to that security, because he/she must eventually return an equivalent amount of the borrowed securities. Likewise, one who has sold (or written) an option
is in a short position, because the option may be exercised at a later date. See also: Long position
, Close a position
A net investment position in a security in which the security has been borrowed and sold but not yet replaced. Essentially, it is a short sale that has not been covered. Also called short
. Compare long position
2. An investment position in which the investor either has written an option or has sold a commodity contract, with the obligation remaining outstanding. Also called short.
If you sell stock short and have not yet repurchased shares to replace the ones you borrowed, you are said to have a short position in that stock.
Similarly, if you sell an options contract that commits you to meet the terms of the contract at some date in the future if the option is exercised, you have a short position in that contract.