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Yavin4

(37,182 posts)
21. The concept of Short Selling is not limited to just stocks.
Sat Jan 30, 2021, 11:16 AM
Jan 2021
There are a number of ways of achieving a short position. The most fundamental method is so-called "physical" short-selling, which involves borrowing assets (often securities such as shares or bonds) and selling them. The investor will later purchase the same number of the same type of securities in order to return them to the lender. If the price has fallen between the time of the initial sale and the time the equivalent securities are repurchased, the investor will have made a profit equal to the difference. Conversely, if the price has risen then the investor will bear a loss. The short seller must usually pay a fee to borrow the securities (charged at a particular rate over time, similar to an interest payment), and reimburse the lender for cash returns the lender would have received had the securities not been lent out, such as any dividends that would have been payable to the lender if they were still the holder of shares that they had lent out.

Short positions can also be achieved through futures, forwards or options, where the investor can assume an obligation or a right to sell an asset at a future date at a price that is fixed at the time the contract is created. If the price of the asset falls below the agreed price, then the asset can be bought at the lower price before immediately being sold at the higher price specified in the forward or option contract. A short position can also be achieved through certain types of swap, such as contracts for differences. These are agreements between two parties to pay each other the difference if the price of an asset rises or falls, under which the party that will benefit if the price falls will have a short position.


https://en.wikipedia.org/wiki/Short_(finance)

The concept is that you are "renting", "borrowing", or gaining the value of an asset today while taking on the liability of paying back said asset at a future time at the value of that asset in the future.

Again, why are you so hostile? Is it because I got some praise for my post? Is that it? Are you that petty?

Recommendations

0 members have recommended this reply (displayed in chronological order):

When it comes to trading stocks, you can take a short position on the direction of the stock. Yavin4 Jan 2021 #1
Thanks for your insight. Nt cate94 Jan 2021 #2
That is a wonderful, succinct, and totally clear explanation. PoindexterOglethorpe Jan 2021 #3
Thank you. I finally understand it now. Vivienne235729 Jan 2021 #4
it depends. uncle ray Jan 2021 #17
Wow. What an interesting development. Those young people Vivienne235729 Jan 2021 #30
great summary--I'd just add they "borrowed" so many shares they cornered the market on themselves fishwax Jan 2021 #6
You don't borrow " the value of the shares" when selling short A HERETIC I AM Jan 2021 #8
The point of my post was to explain short selling in terms that a lay person can understand Yavin4 Jan 2021 #19
Thanks, Yavin. smirkymonkey Jan 2021 #20
..... A HERETIC I AM Jan 2021 #38
+100000000000000000000000000000000 x infinity AmyStrange Jan 2021 #23
Thanks !!! A couple more questions that came to me while reading your explanation. Progressive Jones Jan 2021 #9
Whether you borrow the actual cash value of the stock or rent the stock itself, Yavin4 Jan 2021 #18
Maybe think of it this way for simplicity ADK Jan 2021 #33
Almost there jmowreader Jan 2021 #15
Thank you! I've been looking for an explanation of "this week" all week, but everywhere.. LAS14 Jan 2021 #26
Basically the ending to TlalocW Jan 2021 #5
+100000000000000000000000000000000 x 2 AmyStrange Jan 2021 #24
Thanks for the easy to understand overview PersianStar Jan 2021 #7
A Simple Explaination of Shorting Stock. PurgedVoter Jan 2021 #10
Is the "bag of sugar" shares of stock, or cash against shares already owned by the borrower? nt Progressive Jones Jan 2021 #11
Here's my version as it's been explained to me progree Jan 2021 #12
No correction from me, old pal. You are spot on correct A HERETIC I AM Jan 2021 #13
The concept of Short Selling is not limited to just stocks. Yavin4 Jan 2021 #21
Are you serious?!? And no shit. A HERETIC I AM Jan 2021 #36
The exact title of the OP: Yavin4 Jan 2021 #39
BTW, the expiration of a short position... A HERETIC I AM Jan 2021 #14
Thanks much. I don't know where I got "a few weeks" from, probably that came from some kind progree Jan 2021 #37
it can be either. mopinko Jan 2021 #16
bag of sugar is stock nt PurgedVoter Jan 2021 #40
Thanks ! Yeah, I got that part. I just wasn't clear if the loan was cash or stock. Got it now. nt Progressive Jones Jan 2021 #42
A bunch of Dumpy Incels and gamer dweebs getting their jollies. BlueNProud Jan 2021 #22
A large group of regular people edhopper Jan 2021 #25
Trust me Dump will align himself with these white bros. BlueNProud Jan 2021 #35
Lets hope not. edhopper Jan 2021 #41
Gee, that's how I'd characterize the insurrection gang. Arthur_Frain Jan 2021 #27
There's plenty of Turin_C3PO Jan 2021 #29
I'm quite aware that gamer dweebs cross the political spectrum. Arthur_Frain Jan 2021 #31
LOL ! Lots of crossover there ! n t Progressive Jones Jan 2021 #32
Good thread. dalton99a Jan 2021 #28
In order to short a stock you must have a margin account. marie999 Jan 2021 #34
Here you go! Margot Robbie explains finance terms Quixote1818 Jan 2021 #43
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