shorting a stock

taking an investment position that will benefit if the value of the stock goes down. Traditionally, "shorting a stock" means borrowing shares of stock from another broker, selling them, then buying them back (after the price has fallen) in order to return the stocks to the broker from whom they were borrowed.

You can short a stock using a derivative; this can include buying futures in the stock (i.e., a contract to sell someone else the stocks); or buying a put option (also called a put). A third way is to write a call (i.e., a call option, also known as a call) for the stock.

Shorting a stock usually requires a great deal of skill and courage; even the most talented short will only make money during rare crises.

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Shorting a Stock

A common investing tactic brad from business 101 says he’s done a million times and that you should you do, yet he doesn’t know what the Dow is.

Brad: Ya shorting a stock is kind of my thing. I’ve done it a few times.
Anyone else: Really, which stocks?
Brad: ya know...the big ones