What does short mean in reference to stocks

Question

What does short mean in reference to stocks

Answer 1

"short" has several meanings

If you receive your statement and it shows a "short" position in a particular security, it means that you owe that stock to the brokerage firm.  The stocks that you own are called "long" positions.

Short, also is a form of selling a stock,  You sell short which means either you don't own the stock and you intend to buy it later, hopefully at a lower price.

Short selling also means that you are selling a stock that will not deliver, and you want to remain short.  You do this either hoping you can buy it back later at a lower price OR you can deliver the stock that you own to cover the short sale. (This is usually done for taxes and it is called shorting against the box).

Answer 2

Short means selling a stock or a futures contract without actually having it. This works because you have to settle the trade at some future point in time so if that future point in time is two days from now, you have up to two days for actually buying a stock and settling the transaction.

People who expect the markets to go down short stocks because they expect that the stock that they have sold for say $100 will be available for purchase for $80 a couple of days later and they will be able to make a profit of 20 bucks out of it.  

Answer 3

"Shorting" is a way to make money if a stock goes down in price...

Basically, you borrow stock from your broker, and sell it.  The price goes down, you buy it back, and give the shares you bought back to your broker to cover the loan.  Since you pay commisions at each step, if the price DOESN'T go down, you lose lots of money!