Short selling is the act of selling a stock that the seller does not actually own. In fact, while the seller does not own the stock, there is still a promise to be made to deliver the stock to the buyer at an agreed-upon price. Essentially, what happens in a short sale is a broker lends a certain number of shares to a seller from that broker's inventory. The shares are then sold to a buyer, and the proceeds are credited to the seller's account. Eventually, the seller must close the short position by buying back the same number of shares and returning them to the original broker.

If the price of the stock drops, the seller makes a profit by selling back the shares to the broker at a lower cost. If the price of the stock rises, the opposite happens, and the seller loses money. When initiating a short, sellers are betting that the stock price will fall, meaning they do not believe in the company's chances to appreciate in value in the near future.

The following are the top five most-shorted NYSE stocks as of Oct. 15, 2018, according to data from the WSJ.

1. Rite Aid

Rite Aid (RAD) owns and manages a chain of retail drug stores. The company had a total of 162.25 million shorted shares, a slight increase of 2% from its total at the end of September. The number of shorted shares is 15.4% of the stock’s total public float.

2. Snap

Snap Inc. (SNAP) has added 0.8% in short interest since the end of September to bring the total amount of shorted shares to 141.88 million. This signifies roughly 25% of the company's float. Snap's share price has been hovering around $7 of late. The company's 52-week high of $21.22 was reached back in February, and the $5.77 low happened at the end of October.

3. J.C. Penney

J.C. Penney Co. (JCP) has seen its number of shorted shares increase by 4.5% during the first half of October. This brings the total number of shares shorted to 139.76 million. Not surprisingly, the stock is down nearly 34% over the past year. This represents a very high 46.5% of the company's float and would take about eight days to cover all of its short positions.

4. Ford Motor Company

Automaker Ford's (F) short interest came in at a total number of 130.63 million – an increase of 10.8% since the end of September. The number of days needed to cover all of the short positions is three. The company's shares have traded between $8.17 and $13.48 over the past year.

5. General Electric

General Electric (GE) comes in next with a total of 124.16 million shares shorted. This represents only 1.4% of the company's float and would take just one day to cover all of its short positions, as GE's average daily volume is 131.17 million. The company has been trading towards the bottom end of its 52-week range during this time.

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