covering shorts

covering shorts definition - finance
In the futures market, when prices rise for little apparent reason, traders are often said to be “covering their shorts.” Shorts occur when traders have sold contracts that they didn’t own, expecting prices to continue falling. When prices begin to rise, they must buy those contracts to cover their position so that they maintain a neutral position and stop their losses.

Webster's New World Finance and Investment Dictionary Copyright © 2003 by Wiley Publishing, Inc., Indianapolis, Indiana.
Used by arrangement with John Wiley & Sons, Inc.

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