Monday, January 26, 2009

Short Position

the sale of borrowed security commodity or currency with the expectation that the asset will fall in value.
in the context of options it is the sale (also known as "writing") of an options contract... investopedia.com
"borrowed" means ... you borrow shares or option contracts of a stock from the broker in an open market. Eventually you will have to pay back what was borrowed, you do that by buying back what you sold. If the stock falls in price you are buying back less than the original sale, and that's your profit.

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