short against the box

Short against the box

A short sale of a stock is where the seller actually owns the stock, but does not want to close out the position.

Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Short Sell Against the Box

Describing the action of short selling a security one owns. When one sells against the box, gains and losses are equalized by the long position on a security combined with the short position created by the short sale. One formerly sold against the box generally in order to be able to claim profits on the sale in the following tax year, but the Taxpayer Relief Act of 1997 largely removed this loophole.

Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

short against the box

To sell an owned security short, usually in order to carry a profit on the security into the next tax year. Delivery may be made by using the owned shares or by purchasing new shares in the market. The Taxpayer Relief Act of 1997 largely eliminated shorting against the box as a means to defer a gain into a future year. Also called against the box, selling short against the box.

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.