Short Sale

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Related to short selling: hedging

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.

References in periodicals archive ?
In these ten instances of short selling, short-sellers gained lucrative profits from Tech Pro, which reported a 90% drop within three weeks, and CTEG 40%.
SEC Chair Mary Schapiro, in a February 24, 2010 speech, said the rule "is designed to preserve investor confidence and promote market efficiency, recognizing short selling can potentially have both a beneficial and harmful impact on the market.
In reality, there will be so many safeguards that it will not be the kind of 'pure' naked short selling that exists in other markets," he said.
It also clarifies ASIC's policy for granting relief to allow naked short selling in some circumstances.
net, available to the company to help us fight the naked short selling of MRDY.
Short Selling is the practice of borrowing stock then selling it in hopes that the price will go down and it can be bought back at a lower price, thereby generating a profit and allowing one to return like shares for the borrowed ones.
There has been a great deal of speculation about and absence of credible data surrounding both short selling as well as naked short selling which occurs when stock is sold that is not owned and no attempt is made to borrow that stock.
James Brigagliano, assistant director of market regulation at the SEC, said, "While there may be instances of abusive short selling, 99% of all trades in dollar value settle on time without incident.
Naked short selling, or naked shorting, is an illegal practice of selling shares that have not been affirmatively determined to exist.
OTCBB:SVSN) announced today that the highly respected short selling information service BUYINS.
NEW YORK -- IBAC Corporation (Pink Sheets:ICAN) today acknowledges its concerns regarding the possible naked short selling of its common stock and urges shareholders to request that their shares be delivered to them in certificate form from their broker/dealers in order to help stop this manipulative practice.
PK: PRRM) responded to shareholder concerns regarding the naked short selling of its common stock and urged shareholders to request that their shares be delivered to them in certificate form from their broker/dealers in order to mitigate the manipulative practice.