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Glossary Term: SHORT SELLING

Definition(s) for SHORT SELLING:


1. ) refers to a trading strategy that anticipates a drop in a share's price. Stock or another financial instrument is borrowed from a broker and then sold, creating a short position. That position is reversed, or covered, when the stock is repurchased to repay the loan. If the stock price falls, the short seller will profit by replacing the borrowed shares at a lower cost.

2. ) The sale of shares which the seller does not own. This occurs when the seller is anticipating a fall in the stock's market price at which time he will buy to offset the borrowed shares. He makes a profit on the difference between his short sale and later purchase.



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