Business and Personal Finance Dictionary

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• SELL SHORT
  
  Selling short is a trading strategy that takes advantage of an anticipated drop in a stock's price. To sell short, you borrow shares from your broker, sell them, and keep the proceeds until the stock price drops. If it does, you then buy back the shares at a lower price, return the borrowed shares to your broker (plus interest and commission), and pocket the difference. Suppose, for example, you sell short 100 shares of stock priced at $10 a share. When the price drops, you buy 100 shares at $7.50 a share, give them back to your broker, and keep the $2.50-per-share profit (minus commission). Of course, if the share price rises instead of falls, you may have to buy back the shares at a higher price and suffer the loss.
  
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