Short

Short

One who has sold a contract to establish a market position and who has not yet closed out this position through an offsetting purchase; the opposite of a long position. Related: Long.

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short

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Short

The sale of a security or derivative, 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 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.

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Short (or Short Position)

What Does Short (or Short Position) Mean?

(1) The sale of a borrowed security, commodity, or currency with the expectation that the asset will fall in value. (2) In the context of options, it is the sale (also known as “writing”) of an options contract. The term “short” is the opposite of “long (or long position).”

Investopedia explains Short (or Short Position)

(1) As an example, an investor who borrows shares of stock from a broker and sells them on the open market is said to have a short position in the stock. The investor eventually must return the borrowed stock by buying it back on the open market. If the stock falls in price, the investor buys it for less than he or she sold it for, thus making a profit. Short sales are typically margin transactions. (2) Selling a call (or put) option contract to a buyer gives the buyer the right, not the obligation, to buy from (or sell to) the option seller a specific commodity or asset for a specified price and at a quantity by a specified date.

Related Terms:
• Bear Market
• Buy to Cover
• Long (or Long Position)
• Short Interest
• Short Squeeze