short cover

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Short Cover

The act of buying a security one has previously sold short in order to close a position. In order to make a profit on a short cover, one must buy the security at a price less than the price at which one sold it. It is also simply called a cover.

short cover

To purchase a security that has previously been sold short in order to close out the position. Although short covering may occur at any time, the term is often used in reference to investors with short positions who repurchase stock in strongly rising markets in order to cut their losses or protect their profits. This procedure produces even more strength in the market. Also called cover. See also short squeeze.

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.

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