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Selling short

• A bet by an investor that a stock will go down in price. The investor borrows the stock from a broker, sells it, and eventually buys it back on the market and returns the new shares to the broker. If the stock declines in price between the time the investor sells the shares and buys them back, a profit is realized.

• If an investor thinks the price of a stock is going down, the investor could borrow the stock from a broker and sell it. Eventually, the investor must buy the stock back on the open market. For instance, you borrow 1000 shares of XYZ on July 1 and sell it for $8 per share. Then, on Aug 1, you purchase 1000 shares of XYZ at $7 per share. You've made $1000 (less commissions and other fees) by selling short.

 
 

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 Bet
Borrow
Broker
Buy
Go
Investor
Market
Profit
Purchase
Sell
Shares
Share
Short
Stock
Time
Will
 
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