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by jpdb
1191 days ago
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A simple explanation is that you borrow a certain number of stocks, sell it, and re-buy at some point in the future (at a lower price hopefully) to return the number of stocks you borrowed. Imagine you think widgets that are worth $1 today are going to be worth $0.50 tomorrow. You say to me, "Hey jpdb, can I borrow 100 widgets and give them back to you tomorrow?" I say sure and you turn around and sell those widgets. Tomorrow, we meet up and you take your $100 and buy 100 widgets for the new price of $0.50 each. You return the 100 widgets you borrowed and you now have $50 in your pocket. In this example you have "shorted" widgets. |
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