going short - Investment & Finance Definition
A term that refers to selling a stock or futures contract that is not owned by the seller. An investor going short typically borrows the stock or futures contract from his broker and then sells them. The goal is to later buy the actual stock or futures contract at a lower price, close out the position, and return the securities to the broker. The profit is the difference between the price that the stock was sold at and the price that was paid to buy it back. Also subtracted from the profit are commissions and the interest charged to borrow the securities. If the price rises, however, the short seller will have to buy the securities at a higher price than what they were sold at and will incur a loss.