Short

Short or Short selling is the practice of selling securities that are not currently owned by investors in the hope that they will decline in value. Selling short is the opposite of going long. Short-selling is a strategy used by investors if they believe the price of the underlying asset will decrease in the future. To short a stock, an investor borrows the shares from a third party, paying an interest as the fee. If the share price falls, the investor can buy back those shares at a lower price, return them to the lender and earn a profit from the price difference. If the share price increases, the investor takes a loss and owes that money to the lender.

Short-selling is an unlimited risk and a limited reward strategy. For example, if an investor enters into a short position on a stock trading at $100, the most that he can gain is $100 minus the fees, while the maximum loss in the strategy is unlimited as theoretically, the stock price can rise to infinity.