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In finance, being short in an asset means investing in such a way that the investor will profit if the market value of the asset falls. This is the opposite of the more common long position, where the investor will profit if the market value of the asset rises. An investor that sells an asset short is, as to that asset, a short seller.
Combining any of the four basic kinds of option trades (possibly with different exercise prices and maturities) and the two basic kinds of stock trades (long and short) allows a variety of options strategies. Simple strategies usually combine only a few trades, while more complicated strategies can combine several.
Short Trading Options. Call options are contracts to buy a stock, while put options are contracts to sell. A trader can begin the options trade by either buying — “going long” — or selling ...
Going short, or short selling, is a way to profit when a stock declines in price. While going long involves buying a stock and then selling later, going short reverses this order of events.
The synthetic long put position consists of three elements: shorting one stock, holding one European call option and holding dollars in a bank account. (Here is the strike price of the option, and is the continuously compounded interest rate, is the time to expiration and is the spot price of the stock at option expiration.)
Short selling is an investment technique that generates profits when shares of a stock go down rather than up. In most cases, shorting stocks is best left to the professionals.
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