Short (or Short Position)

Filed Under » , ,
Dictionary Says

Definition of 'Short (or Short Position)'

1. The sale of a borrowed security, commodity or currency with the expectation that the asset will fall in value.

2. In the context of options, it is the sale (also known as "writing") of an options contract.

Opposite of "long (or long position)".
Investopedia Says

Investopedia explains 'Short (or Short Position)'

1. For example, an investor who borrows shares of stock from a broker and sells them on the open market is said to have a short position in the stock. The investor must eventually return the borrowed stock by buying it back from the open market. If the stock falls in price, the investor buys it for less than he or she sold it, thus making a profit.

2. For example, selling a call (or put) options contract to a buyer entitles the buyer the right, not the obligation to buy from (or sell to) you a specific commodity or asset for a specified amount at a specified date.

Related Definitions

  •

    Short Interest Theory

    An investment theory that states that the price of a security will eventually have to rise after a period of heavy short selling. The short interest theory has the price increase ...
    Read More »

  • Buy Weakness

    A proactive trading strategy in which a trader takes profits by closing out of a short position or buying into a long position. This strategy is used when the price of the asset being ...
    Read More »

  • Long (or Long Position)

    1. The buying of a security such as a stock, commodity or currency, with the expectation that the asset will rise in value.2. In the context of options, the buying of an options ...
    Read More »

    • Regulation SHO

      A regulation implemented on January 3, 2005 that seeks to update legislations concerning short sale practices. Regulation SHO established "locate" and "close-out" standards that are ...
      Read More »

    • Short Covering

      Purchasing securities in order to close an open short position. This is done by buying the same type and number of securities that were sold short. Most often, traders cover their shorts ...
      Read More »

    • Short Interest

      The quantity of stock shares that investors have sold short but not yet covered or closed out. Short interest is a market-sentiment indicator that tells whether investors think a ...
      Read More »

    • Short-Sale Rule

      A Securities and Exchange Commission (SEC) trading regulation that restricted short sales of stock from being placed on a downtick in the market price of the shares. Short sales could ...
      Read More »

    • Weak Shorts

      Refers to the group of investors who hold a short position and are quick to exit their positions at the first sign of strength in the underlying asset. This group of investors looks to ...
      Read More »

    • Short Squeeze

      A situation in which a lack of supply and an excess demand for a traded stock forces the price upward.
      Read More »

    • Market Neutral

      A strategy undertaken by an investor or an investment manager that seeks to profit from both increasing and decreasing prices in a single or numerous markets. Market-neutral strategies ...
      Read More »

Articles Of Interest

Sponsored links
Hot Definitions
Partner Links
Suggested Definitions