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Jan 26, 2021
12:28:21pm
The Old Y All-American
What does shorting a stock mean 101:
I thought some might find this helpful.

Shorting is when you sell a stock on the open market but don't own the stock yet. (You must get permission from your broker to do this). You effectively borrow the stock and sell it at current market rates with a promise to return the stock at a later date.

If the stock price goes down then you buy it at that cheaper price and give it back. Boom. You just bought something for less than you sold it for.

On the other side, a problem might occur when you can't find the stock to buy because no one is willing to sell theirs. There are only a finite amount of stocks, after all. This is highly unlikely because the market is far from unified. But, if everyone who owned those stocks decided they we never going to sell until the price was ridiculous, then you'd need to offer more and more money until someone cracked and sold to you. This is called a short squeeze.
The Old Y
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The Old Y
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Apr 4, 2005
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May 3, 2024
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