Series 24: Short Positions In Margin Accounts

Short Positions in Margin Accounts

A short sale or “selling short” is the sale of borrowed securities in anticipation of a price decline with the understanding that the securities must be bought back and returned to the lender. Investors sell short expecting that the price of a stock will decline in the short-term and that they can buy back these shares at a lower price and pocket the difference. The risk is that the stock price will rise rather than fall, and they will eventually have to buy back the stock at a loss to return the borrowed securities.

All short sales must be recorded i