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Short sale - Wikipedia

Short selling and selling short are synonymous terms. The opposite transaction would be "buying long". If you are "short" a stock, it means that you expect the price to go down.

Short selling as a strategy has several inherent risks:. Short selling is controversial and is the subject of SEC proposals to restrict its use.

The Basics of Shorting Stock

A Wiki with links to the proposals and an opportunity to comment on them appears here. A "naked" short sale, refers to a short sale in which the seller makes the deal without ever having access to the securities to begin with. In a traditional Short sale, the buyer will borrow the securities.

When no securities are available the naked short-seller will show that a sale has taken place even though nothing has actually been exchanged. Until the short-seller has bonds to deliver, the buyer doesn't have to pay. But by showing that a sale has taken place even though the goods haven't actually been transferred, a naked short-sale artificially drives a stock's price down to a level that's not reflective of true supply and demand.

Many financial economists believe that some short selling is necessary to prevent prices from reflecting only the views of the most optimistic investors in the market.

Locate (finance) - Wikipedia

In doing this, short sellers moderate prices both when they are shorting and when they later cover. Nonetheless, short selling has long been unpopular with security owners because they believe it can depress stock prices.

There is little if anything security owners can do to prevent permissible short selling. Some forms of short selling are illegal. From the makers of. Unable to complete your request. Please refresh your browser. See more recent news. ESMA Issues Positive Opinion On Short Selling Ban By Spanish CNMV. Spanish market regulator bans short selling in Liberbank. Is Shorting a Stock a Good Idea? If you have a negative outlook on a stock, selling it short allows you to bet against it.

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