- Jan 21, 2000
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Short selling is the selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short selling is a legitimate trading strategy.
Typically, a short sale involves the sale of a security at the current price which is settled with shares lent to the short seller by a third party. The seller makes the short sale on the assumption that the price of the security will go down. If this occurs, the short seller will purchase shares to lock in a profit, extinguish the short position and replace the shares previously borrowed.
Of course, if the stock rises in price, the short seller may elect to close out the position through a purchase, and absorb the resulting loss.
Have a good day
ET
Typically, a short sale involves the sale of a security at the current price which is settled with shares lent to the short seller by a third party. The seller makes the short sale on the assumption that the price of the security will go down. If this occurs, the short seller will purchase shares to lock in a profit, extinguish the short position and replace the shares previously borrowed.
Of course, if the stock rises in price, the short seller may elect to close out the position through a purchase, and absorb the resulting loss.
Have a good day
ET