Stock Purchases and Sales: Long and Short | Investor.gov

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A "short" position is generally the sale of a stock you do not own. Investors who sell short believe the price of the stock will decrease in value. If the price ... Skiptomaincontent The.govmeansit’sofficial. Federalgovernmentwebsitesoftenendin.govor.mil.Beforesharingsensitiveinformation,makesureyou’reonafederalgovernmentsite. Thesiteissecure. The https:// ensuresthatyouareconnectingtotheofficialwebsiteandthatanyinformationyouprovideisencryptedandtransmittedsecurely. Investor.gov U.S.SecuritiesandExchangeCommission AuxiliaryHeader SearchInvestor.gov Pleaseentersomekeywordstosearch Mainnavigation Useraccountmenu Login Breadcrumb Home IntroductiontoInvesting HowStockMarketsWork Mainnavigation StockPurchasesandSales:LongandShort Havinga“long”positioninasecuritymeansthatyouownthesecurity.Investorsmaintain“long”securitypositionsintheexpectationthatthestockwillriseinvalueinthefuture.Theoppositeofa“long”positionisa“short”position. A"short"positionisgenerallythesaleofastockyoudonotown.Investorswhosellshortbelievethepriceofthestockwilldecreaseinvalue.Ifthepricedrops,youcanbuythestockatthelowerpriceandmakeaprofit.Ifthepriceofthestockrisesandyoubuyitbacklateratthehigherprice,youwillincuraloss.Shortsellingisfortheexperiencedinvestor. ShortSales Ashortsaleisthesaleofastockthataninvestordoesnotownorasalewhichisconsummatedbythedeliveryofastockborrowedby,orfortheaccountof,theinvestor.Shortsalesarenormallysettledbythedeliveryofasecurityborrowedbyoronbehalfoftheinvestor.Theinvestorlaterclosesoutthepositionbyreturningtheborrowedsecuritytothestocklender,typicallybypurchasingsecuritiesontheopenmarket. Investorswhosellstockshorttypicallybelievethepriceofthestockwillfallandhopetobuythestockatthelowerpriceandmakeaprofit.Shortsellingisalsousedbymarketmakersandotherstoprovideliquidityinresponsetounanticipateddemand,ortohedgetheriskofaneconomiclongpositioninthesamesecurityorinarelatedsecurity.Ifthepriceofthestockrises,shortsellerswhobuyitatthehigherpricewillincuraloss. Brokeragefirmstypicallylendstocktocustomerswhoengageinshortsales,usingthefirm’sowninventory,themarginaccountofanotherofthefirm’scustomers,oranotherlender.Aswithbuyingstockonmargin,shortsellersaresubjecttothemarginrulesandotherfeesandchargesmayapply(includinginterestonthestockloan).Iftheborrowedstockpaysadividend,theshortsellerisresponsibleforpayingthedividendtothepersonorfirmmakingtheloan. FeaturedContent InvestingQuiz–April2022 Testyourknowledgeofcompoundinterest,indexfunds,investmentfraud,andmore! GettingaTaxRefund?ConsiderInvestingIt Ifyou’regettingataxrefundthisyear,readourlatestDirector’sTakearticletolearnwhyyoumightwanttothinkaboutinvestingit. Spotlight:DigitalAssetsand“Crypto” Expandyourknowledgeaboutinvestmentopportunitiesindigitalassetsand“crypto.” InterestedinMargin?UnderstandInterest. ReadourlatestInvestorBulletintolearnhowbroker-dealerschargeinterestonmarginloans.  Tweetsby@SEC_Investor_Ed SignupforInvestorUpdates SignupforInvestorUpdatesEnterEmailAddress FollowUs Twitter Facebook YouTube SiteInformation ReturntoTop



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