The short position refers to the selling entity in a forward contract. A forward contract is an agreement between two parties to buy or sell an asset (which can be of any kind) at a pre-agreed future point in time. ...
In general, taking a short position means borrowing underlying assets from someone and immediately selling them on the assumption that the market price of the assets will fall. If the investment is successful, the assets are re-purchased later at a lower price and returned to the lender, leaving the investor with a gain. If the value of the assets rises, however, the investor is forced to buy them back at a higher price and ends up losing money.
In finance, a shortposition in a security, such as a stock or a Bond, or equivalently to be short a security, means the holder of the position has sold a security that he does not own, with the intention to buy it back at a later time at a lower price.
Similarly, a shortposition in a futures contract, or to be short a futures contract, means the holder of the position has the obligation to sell the underlying asset at a later date.
It is commonly understood that the term "short" is used because the short seller is in a deficit position with his broker.
It is commonly understood that "short" is used because the short seller is in a deficit position with his brokerage house.
The short seller takes a fundamentally negative, or "bearish" stance, anticipating that the price of the shorted stock will fall (not rise as in long buying), and it will be possible to buy at a lower price whatever was sold, thereby making a profit ("selling high and buying low," to reverse the adage).
Short interest is defined as the total number of shares that have been sold short, but not yet covered.
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