(Finans) In finance, short selling or "shorting" is a way to profit from the decline in price of a security, such as a stock or a bond. In contrast, investors who "go long" with an investment hope the price will rise
A strategy that profits from a security price decline It is initiated by borrowing the security from a broker-dealer and selling it in the open market This strategy is closed (covered) at a later date by buying back the security and returning it to the lending broker-dealer
Selling a security that you don't own, in the hope that the price will decrease before you buy it back When you short sell you are borrowing the security from another investor, this means you could be required to buy the security back and return it at any time, you are also required to pay the lender any dividends or distributions that the security makes while you are borrowing it The seller must declare a short sale when placing the order
An arrangement with a broker to borrow and sell securities The borrowed securities are replaced with securities purchased later Short sells let investors earn profits from falling securities prices 578