Short sale: Difference between revisions
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The practice of selling a security you don’t own in the first place, meaning you have negatively [[correlation|correlated]] [[exposure]] to the price of the security. To do this you will need to borrow the stock under a [[stock loan]] | The practice of selling a security you don’t own in the first place, meaning you have negatively [[correlation|correlated]] [[exposure]] to the price of the security. To do this you will need to [[borrow]] the stock under a [[stock loan]], and the agreement you will want for that, if you’re in the English speaking world outside America, will be the {{gmsla}}. | ||
Short selling is risky for you — your losses can be conceptually infinite — and for the issuers of the securities you short sell, especially if they happen to be financial institutions. Therefore this activity is regulated in many jurisdictions, including the {{EU}} in their wonderfully entexted [[EU Short Selling Regulations]]. | |||
{{Seealso}} | |||
*[[stock loan]] | *[[stock loan]] | ||
[[EU Short Selling Regulations]] | *{{gmsla}} | ||
*[[EU Short Selling Regulations]] | |||
{{C2|Regulation|Stock lending}} | {{C2|Regulation|Stock lending}} | ||
Revision as of 17:15, 1 November 2017
The practice of selling a security you don’t own in the first place, meaning you have negatively correlated exposure to the price of the security. To do this you will need to borrow the stock under a stock loan, and the agreement you will want for that, if you’re in the English speaking world outside America, will be the 2010 GMSLA.
Short selling is risky for you — your losses can be conceptually infinite — and for the issuers of the securities you short sell, especially if they happen to be financial institutions. Therefore this activity is regulated in many jurisdictions, including the European Union in their wonderfully entexted EU Short Selling Regulations.