Sell Short

A trading strategy in which an investor borrows shares of a security or futures contract (typically from a brokerage firm’s inventory) and offers them for sale to other investors. If the price goes down, as the investor believes it will, he or she will buy the position back at the lower price and return them to the lender. If the price rises, the investor will be forced to buy the shares or contract back at a higher price to return them to the lender, resulting in a loss. In either case, the gross profit (or loss) on the trade will be the difference between the buy and sell price.