I have heard about "shorting" stock. What does this mean and how do you do it?

Question

Do you have to find a broker or is there somewhere you can buy direct?

Answer 1

Borrowing a security (or commodity futures contract) from a broker and selling it, with the understanding that it must later be bought back (hopefully at a lower price) and returned to the broker. Short selling (or "selling short") is a technique used by investors who try to profit from the falling price of a stock. For example, consider an investor who wants to sell short 100 shares of a company, believing it is overpriced and will fall. The investor's broker will borrow the shares from someone who owns them with the promise that the investor will return them later. The investor immediately sells the borrowed shares at the current market price. If the price of the shares drops, he/she "covers the short position" by buying back the shares, and his/her broker returns them to the lender. The profit is the difference between the price at which the stock was sold and the cost to buy it back, minus commissions and expenses for borrowing the stock. But if the price of the shares increase, the potential losses are unlimited. The company’s shares may go up and up, but at some point the investor has to replace the 100 shares he/she sold. In that case, the losses can mount without limit until the short position is covered. For this reason, short selling is a very risky technique. SEC rules allow investors to sell short only on an uptick or a zero-plus tick, to prevent "pool operators" from driving down a stock price through heavy short-selling, then buying the shares for a large profit.

Answer 2

Shorting refers to buying Calls and selling Puts it's commonly refered to as Options Trading. Bascially you have the right but, not obligation to purchase or sell a stock at the given price. Shorting is the Put part of options. Example. Company XYZ stock is selling for $15 per share you what to short is b/c you think it is going down in price in a very short time. You buy a PUT which is selling a number of shares at $15 (this is a contract since you don't actually own the shares) then before a deadline ( I belive it is the the 3rd Friday of the month) you buy those stock back at market price. You have bet on it going down so lets say it is now $12 per share you just made $3 per share. Get it? But, if the stock went up to say $17 per share you just lost $2 per share. Understand?

If you want to learn more I suggest you major in Finace at a really good business schoolthen here is the US get your Series 7 possibly Series 63 so you can trade stock and understand the market. Options trading is VERY risky and few understand it well enough to make big bucks. Don't just dive into it learn as much as you can about how the stock market, global ecenomy, an doptiosn trading works. Mabe you will find a mentor who is very successful in the market wiling to teach you. I am very smart and I know a lot of things but, I can seem to totally understand why the market does what it does. It is best to leave to the pros.

Answer 3

Shorting stocks means you think the price is going to go down. so you'll sell it at say $70 a share and buy it back at $60. I don't know where you are, but in the US, the easiest way to do this is with "put options"...you don't need to own the stock in the first place. There are other ways to do it, like if you owned the stock you could do different things, but this is by far the easiest to understand and do. You would buy the "put option" first....don't worry yourself with writing covered options and all that other stuff at first if you don't own the stock. If you own the stock, just sell it.

You'll need a broker to do this..it's a different market than stocks.

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Answer 4

I believe that it can be that they come from the same stock, however the meat of the stock may be a bit different or differently fed. For the narcissist, he/she is involved so much with themselves that there is no room for thoughts of others, or things that do not matter to them. For the Martyr he is one that has a belief, right or wrong, about a cause, or purpose of which he is willing to give so much of himself, including himself unto death, to the ends of that cause. "The means justify the end," To bring about that cause for the benefit of all. So if we take the two together, (and we only have your one quote and not the all of the statement) it would appear that this guy, feels that people who are martyr's are narcissist, into themselves for their cause in exclusion to all other any reasoning. Martyr's are not necessarily bad for mankind. on the other hand narcissists have nothing to really offer mankind. One could say they take up space. that's just my take.

Answer 5

You need a broker to short stock, It is done on margin. You sell stock you don't own (borrowed from your brokers inventory) with the strategy you can buy it back cheaper in the future.The money fro the sale is put in your account. When you buy the stock to replace the stock you borrowed (hopefully a a cheaper price) you pocket the difference between the sale and the purchase price.

Answer 6

TC gave a very clear explanation of shorting. Well done TC!!

you can short stocks through CFDs (contract for difference or spreadbetting)

do a google search on those terms should u be unfamiliar with them

Answer 7

shorting means ,selling stock or index in futures,with a intention to cover the same after drop in price or index, he is called bear in share market,but one should have a stoploss for that ,in case market doesn't correct

in a bear market one can sell on rallies near the resistant range,placing the stoploss just above the resistance range...