SOLD SHORT Meaning and
Definition
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The term "sold short" refers to a financial trading strategy where an investor or trader sells a security that they do not currently own, with the expectation that its price will decline. This strategy is commonly employed in the stock market, but can also be applied to other types of securities such as bonds, commodities, or currencies.
When an investor sells short, they borrow the security from a broker or another investor and immediately sell it in the open market. The investor hopes to profit from the subsequent decline in the price of the security, as they will eventually have to buy it back to return it to the lender. If the price does indeed drop, the investor can repurchase the same security at a lower price, thus making a profit on the difference.
One notable aspect of selling short is that it involves selling something that the seller does not own. This is possible through margin accounts, which allow investors to borrow securities or money from a broker to conduct their transactions. Additionally, selling short carries a certain level of risk, as the price of the security could rise instead of falling, resulting in potential losses for the seller.
Selling short is often used as a means to hedge against existing investments or to speculate on the downward trend of a security. It is a trading strategy that requires careful analysis and understanding of market conditions, as well as the potential risks involved.
Common Misspellings for SOLD SHORT
Etymology of SOLD SHORT
The term "sold short" is commonly used in finance and investment to describe the act of selling borrowed securities with expectations of their price decreasing in the future. The etymology of the phrase can be traced back to the early days of stock markets.
The word "sold" in this context refers to the act of selling, which comes from Latin "sōlus", meaning "alone" or "by oneself". It eventually evolved into the Old English word "sellan", which means "to give", "to hand over", or "to deliver".
The term "short" originates from an Old English word, "sceort", which means "having less length" or "not long". It was used to describe physical objects that were shorter than standard or desired.
In the context of selling borrowed securities, the expression "sold short" is believed to have originated in the late 19th century on Wall Street.
