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Short Selling

Selling borrowed shares to profit from decline

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What is Short Selling?

Short Selling Selling borrowed shares with the expectation of buying them back at a lower price. Short selling carries unlimited risk since stock prices can rise indefinitely. Buying put options or using bear put spreads provides a defined-risk alternative to short selling.

Complete definition

Selling borrowed shares with the expectation of buying them back at a lower price. Short selling carries unlimited risk since stock prices can rise indefinitely. Buying put options or using bear put spreads provides a defined-risk alternative to short selling.

Example

Instead of shorting 100 shares of AAPL (unlimited risk), you buy a put option for a defined-risk bearish bet.

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