Multiple choice question long position or short position .....?

Question

A trader is described as taking a ----------, If he is selling more of an asset than what he holds in inventory.

a) short position

b) long position

c) defensive position

d) passive position

Thanks.

Detailed answer would be much appreciated.

Answer 1

Short position.

that means he is selling the stock before he actually owns it, hoping that the price will go down. For example, he may"sell" it to someone at $10/share, and then if it drops to $9/share he will buy some on the open market and then give it to the person he originally sold it to.. Then he makes $1 profit per share.