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Short Selling

Glossary

Short selling is a trading strategy where an investor borrows shares, sells them at the current market price, and aims to buy them back later at a lower price to profit from the decline.

How Short Selling Works:

  1. Borrow shares from a broker
  2. Sell the borrowed shares at the market price
  3. Buy them back later (hopefully at a lower price)
  4. Return the shares to the lender and pocket the difference

Risks:

  • Unlimited loss potential (if the stock price rises instead of falling)
  • Margin requirements (brokers may require additional collateral)
  • Short squeezes can force rapid buybacks, driving the price even higher

Short selling is often used for hedging, speculation, or betting against overvalued stocks.

You can also see all short selling and short interest on the Unusual Whales Shorts page

See also: Short Interest and Short Squeeze