Short Selling

Short selling is an investment strategy that involves borrowing shares and selling them in anticipation of a price decline, then buying them back at a lower price to profit from the difference.

Naked short selling

Naked Short Selling (Naked Short)

It refers to placing an order to sell short without actually holding the shares, and later repaying those shares. Repaying the shares is called "repayment," and in Korean this practice is called short selling. It is also called "naked short selling," a redundant misnomer because "공" is the Hanja character for "without." In Korea, only institutions can do this, so when the news mentions short selling, this is usually what they mean.

Short covering

Covering (Short Covering)

The short position sold without buying the shares must be bought back at some point; that point is called short covering.

Short Squeeze

Short Squeeze

It usually occurs for three reasons:

1. When the stock price rises and short sellers, unable to endure the surge, cover their shorts (the higher it goes, the more money they lose).
2. When the stock price rises and short sellers receive a margin call they can't cover and are liquidated (forced liquidation).
3. When traders who found a breakout point in technical analysis gradually pile in, or when institutions start buying.

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Topics: stocks
Category: Wiki/Economy