Short Sale

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Short Sale

A method of gaining profit from an anticipated decline in the price of a stock.

An individual who sells short sells either stock or Securities that he or she does not own and that are not immediately ready for delivery. Generally the seller borrows the shares needed to cover the sale from a Broker and then delivers these shares to the buyer. The seller deposits an amount that is equal to the value of the borrowed shares with the broker. This amount stays on deposit with the broker until the stock is returned. The seller must ultimately return the same number of shares of the same stock to the broker, and the transaction is not fully executed until the stock is returned. The broker lending the stock is entitled to all the benefits he or she would have received if the stock had not been lent. When a dividend is paid, then the seller-borrower is required to pay the broker-lender an amount equal to the dividend.

West's Encyclopedia of American Law, edition 2. Copyright 2008 The Gale Group, Inc. All rights reserved.
References in periodicals archive ?
Although we find that property--casualty insurers in the Gulf Coast region have the largest stock price decreases, we do not find evidence of a significant difference in short-selling activity for the Gulf Coast region, property--casualty stocks and other insurance stocks in the prelandfall period for Rita.
Some people view short-selling as un-American because they say you're selling short Corporate America.
The required technology structure to implement short-selling mechanism between the Misr for Central Clearing, Depository, and Registry (MCDR), the Egyptian Exchange (EGX), and brokerage companies will be finalised soon.
The limit acts as a safeguard for the orderly conduct of short-selling activities, while still providing ample room for price discovery, the PSE said.
Pong Teng Siew, head of research at Inter Pacific Securities Sdn Bhd, said the reintroduction of short-selling was positive.
Rashed Al Blooshi, Chief Executive of ADX stated "We are delighted to have granted Al Ramz Capital the License for Technical Short-Selling, a service which comes within the framework of our strategic goals, which are increasing market cap and product range and attracting and activating a wider range of investors via diversifying investment instruments in order to increase the level of liquidity to match global markets.
Ehab Rashad, CEO of Al Safwa Mubasher Financial Services, the brokerage firm who will be the first to provide the technical short selling services to their customers, said "we are always keen to provide the latest cutting edge financial services to benefit our customers, of which the technical short-selling opportunity is the latest."
Strictly speaking, short-selling research organisations are adding an 'aphrodisiac' to market intelligence that confuses small and medium-size investors.
Hedge funds have embarked on the fourth major short-selling cycle in crude oil futures and options since the start of 2015.
Prior work generally finds that short-selling activity contains information about future price movements as current short-selling activity relates inversely to subsequent stock returns (Diamond and Verrecchia, 1987; Senchack and Starks, 1993; Aitken et al., 1998; Desai et al., 2002; Boehmer, Jones, and Zhang, 2008; Diether, Lee, and Werner, 2009).
The Financial Conduct Authority has temporarily banned the short-selling of three Portuguese stocks after the (http://www.ibtimes.co.uk/articles/486084/20130703/portugal-sovereign-debt-crisis-bailout-coehlo.htm) political turmoil caused a rift in the equity markets .