What does it mean to short a stock?

Shorting a stock means opening a position by borrowing shares that you don't own and then selling them to another investor. Shorting, or selling short, is a bearish stock position -- in other words, you might short a stock if you feel strongly that its share price was going to decline. Image source: Getty Images. How does short selling work?

What is the opposite of a short position in stocks?

The opposite of a short position in stocks is a long position, which is opening a position with a buy order instead of a sell order. In short, the opposite of shorting a stock is buying it.

What is a short sale?

Short selling is for the experienced investor. A short sale is the sale of a stock that an investor does not own or a sale which is consummated by the delivery of a stock borrowed by, or for the account of, the investor. Short sales are normally settled by the delivery of a security borrowed by or on behalf of the investor.

Should you sell short against a long stock position?

For instance, if you own call options (which are long positions), you may want to sell short against that position to lock in profits. Or, if you want to limit downside losses without actually exiting a long stock position, you can sell short in a stock that is closely related to or highly correlated with it.