Selling a security
that the seller does not own but is committed to repurchasing eventually. It is used to capitalize
on an expected decline in the security's price.
of borrowed securities
. In a short sale, one borrows securities, usually from a brokerage
, and sells them. One then buys
the same securities in order to repay
the brokerage. Selling short is practiced if one believes that the price
of a security will soon fall. That is, one expects to sell the borrowed securities at a higher price than the price at which one will buy in order to return the securities. Selling short is one of the most common practices of hedge funds
. This is also called establishing a bear position. See also: Margin account
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
The sale of a security that must be borrowed to make delivery. Short sales usually, but not always, entail the sale of securities that are not owned by the seller in anticipation of profiting from a decline in the price of the securities. A short sale is not permitted when the last preceding different price was higher than the current price. Also called selling short
. See also fictitious credit
, ghost stock
, lending at a premium
, lending at a rate
, odd-lot short sales
, Rule 10a-1
, short against the box
, short cover
, synthetic short sale
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
In real estate,the lender's agreement to release its lien upon property so that the property can be sold, even though the sale price will not generate enough money to pay off the loan. Investors who specialize in purchasing preforeclosure properties will often negotiate a short sale price with the lender as part of their strategy.Oftentimes,the lender will agree to forgive the balance of the mortgage debt.
The Complete Real Estate Encyclopedia by Denise L. Evans, JD & O. William Evans, JD. Copyright © 2007 by The McGraw-Hill Companies, Inc.
An agreement between a mortgage borrower in distress and the lender that allows the borrower to sell the house and remit the proceeds to the lender.
Ashort sale is an alternative to foreclosure or a deed in lieu of foreclosure. See Payment Problems/Position of the Lender/Permanent Problem.
The Mortgage Encyclopedia. Copyright © 2004 by Jack Guttentag. Used with permission of The McGraw-Hill Companies, Inc.
A sale in which the seller borrows the stock certificates or other property delivered to the buyer. At a later date, the seller either purchases similar stock or property necessary to "cover" the sale, and delivers it to the lender or delivers to the lender stock or property that he or she already held but did not wish to transfer at an earlier date. For income tax purposes, there is no gain or loss on the transaction until the short sale is covered by purchase and transfer. Special rules apply in determining whether the gain or loss on a short sale is a long-term or short-term capital gain or loss.
Copyright © 2008 H&R Block. All Rights Reserved. Reproduced with permission from H&R Block Glossary