selling short


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Selling short

Selling a stock not actually owned. If an investor thinks the price of a stock is going down, the investor could borrow the stock from a broker and sell it. Eventually, the investor must buy the stock back on the open market. For instance, you borrow 1000 shares of XYZ on July 1 and sell it for $8 per share. Then, on Aug. 1, you purchase 1000 shares of XYZ at $7 per share. You've made $1000 (less commissions and other fees) by selling short.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Sell Short

To sell borrowed securities. In selling short, 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 buys in order to return the securities. Selling short is one of the most common practices of hedge funds. See also: Margin account.

Short Sale

The sale 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

selling short

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.
References in periodicals archive ?
* Japanese warrant arbitrage -- This primarily involves buying a Japanese warrant that trades cheaply and simultaneously selling short the underlying Japanese stock.
* Plain-vanilla market-neutral strategy -- This is the long/short equity basket, meaning you buy a basket of cheap stocks, while simultaneously selling short equal amounts of over-priced stocks.
I was shocked today when I went to the mall and saw that most of the shops around were selling shorts that are only enough to cover your backside!