Difference between revisions of "Short sale"

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A short sale occurs when someone [[borrow]]s a [[security]] from a [[broker]] and [[sell]]s it with the understanding that he or she will later [[buy]] it back (hopefully at a lower [[price]]) and return it to the [[broker]]. Investors use [[short]] selling (or "selling short") to try to profit from the falling price of a [[stock]].  
A short sale occurs when someone [[borrow]]s a [[security]] from a [[broker]] and [[sell]]s it knowing that he or she has the obligation to later [[buy]] it back (hopefully at a lower [[price]]) and return it to the [[broker]]. Investors use [[short]] selling (or "selling short") to try to profit from the falling price of a [[stock]].  


For example, if an investor believes [[stock]] x is overpriced and will fall, he might want to sell short 100 [[share]]s of x. His [[broker]] will borrow the shares from someone who owns them with the promise that the investor will return them later. The investor immediately sells the borrowed shares at the current market price. If the price drops, he "covers" the short position by buying back the shares, and his broker returns them to the [[lender]].  
For example, if an investor believes [[stock]] x is overpriced and will fall, he might want to sell short 100 [[share]]s of x. His [[broker]] will borrow the shares from someone who owns them with the promise that the investor will return them later. The investor immediately sells the borrowed shares at the current market price. If the price drops, he "covers" the short position by buying back the shares, and his broker returns them to the [[lender]].  
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The SEC ban is set to expire on Oct. 2, but it is expected to be extended past that date.<ref>{{cite web|url=http://www.tradersmagazine.com/news/102115-1.html?ET=tradersmagazine_news:e177:47854a:&st=email|name="Short Sale Ban Chases High-Frequency Traders From the Market"|org=Traders Magazine|date=September 29, 2008}}</ref>
The SEC ban is set to expire on Oct. 2, but it is expected to be extended past that date.<ref>{{cite web|url=http://www.tradersmagazine.com/news/102115-1.html?ET=tradersmagazine_news:e177:47854a:&st=email|name="Short Sale Ban Chases High-Frequency Traders From the Market"|org=Traders Magazine|date=September 29, 2008}}</ref>


'''CBOE Creates Short Sale Update Information  '''  
'''Cboe Creates Short Sale Update Information  '''  
In September of 2008, [[Chicago Board Options Exchange]] ([[CBOE]]) launched a "Short Sale Update" Web Page (http://www.cboe.com/ShortSale) to keep [[options]] traders, customers, and CBOE Members fully informed on recently enacted restrictions on short sales. It contains a full compendium of links to lists of the prohibited financial securities, by exchange, and lists relevant SEC and CBOE information documenting the various restrictions. No one source had previously been created to lay out the broad swath of regulatory information on this issue.  
In September of 2008, [[Chicago Board Options Exchange]] ([[CBOE]]) launched a "Short Sale Update" webpage to keep [[options]] traders, customers, and Cboe members fully informed on recently enacted restrictions on short sales. It contained a full compendium of links to lists of the prohibited financial securities, by exchange, and listed relevant SEC and CBOE information documenting the various restrictions.  


Because regulations can and do change, CBOE plans to keep the Web page updated.


== References ==
== References ==
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