Option Investor
Glossary

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Selling Short

This is the act of borrowing a security from a broker with the agreement that the stock is to be returned. This is usually done if the investor believes that the price of the stock is going down. The investor will borrow the stock and sell it, hoping that the price will go down and that they will be able to buy it back at a lower price. This is where the profit potential lies in such a transaction.