Short Selling

Short selling refers to a financial term which is an option to profit from the decline in price of stock, bond and other securities. Most investors will expect a price hike and so they will go for investment.

In order to profit from the stock price going down, a short seller will generally borrow a security and sell it expecting a hike in its value. In this way he can buy back the security at a much lower price and have the difference. But this method has got several risk factors. But short selling or being short is generally used as a blanket term for all strategies that allow an investor to take advantage of the price decline of a security.

These strategies also have buying options known as puts. According to many people at times, options or future activities are labeled as puts. This is because this activity magnifies only the profit out of a security's price loss.

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