noun
shorting a stock
SHOR-ting ə STOK
Shorting a stock (noun) means the practice of borrowing shares you do not own, selling them at the current price, and later buying them back to return to the lender, aiming to profit if the price has fallen in between. Example: “Shorting a stock ahead of earnings is a bet that the results will disappoint.”
noun
1
finance The practice of borrowing shares you do not own, selling them at the current price, and later buying them back to return to the lender, aiming to profit if the price has fallen in between.
"Shorting a stock ahead of earnings is a bet that the results will disappoint."
"He made his name shorting a stock the rest of the market adored."
How to use shorting a stock
Learner’s notesIn plain EnglishBetting that a share price will fall, by selling shares you borrowed and buying them back cheaper.
When to use it
Standard finance vocabulary; the verb short is used freely in market commentary.
Memory tip
Traders say they are short a stock, without any preposition: I'm short Tesla.
Easily confused with
going long
put option
short covering
Common pairings
short a stock
short position
short interest
cover a short
naked short selling
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_____ ahead of earnings is a bet that the results will disappoint.
Synonyms
View more →Antonyms
going long
buying long
Related words
Frequently asked questions
How do you actually short a stock?
Through a margin account, your broker borrows the shares from another client or institution and sells them for you at the market price. You owe those shares back, so you eventually buy them on the open market to close the position, and your profit or loss is the difference between the sale and repurchase prices, less borrowing fees and any dividends you must pay the lender.
What is the risk of shorting a stock?
The loss is theoretically unlimited. A share you buy can only fall to zero, but a share you have sold short can rise without limit, and you must buy it back at whatever it costs. Brokers can also force you to close the position early through a margin call or by recalling the borrowed shares.
What is a short squeeze?
When a heavily shorted stock starts rising, short sellers rush to buy shares to limit their losses. That buying pushes the price higher still, forcing more of them to cover, in a spiral that can send the price far above anything the company's fundamentals justify.
What is the meaning of shorting a stock?
"shorting a stock" (noun) means the practice of borrowing shares you do not own, selling them at the current price, and later buying them back to return to the lender, aiming to profit if the price has fallen in between.
