Question:easy
What is Short Selling in stock market lingo?
What is Short Selling in stock market lingo?
Show Hint
Think about borrowing shares first and selling them before you actually own them.
Updated On: Jul 14, 2026
- Selling the shares which you do not own.
- Selling a share after owning it for a short period of time.
- Selling all the shares in your booty which are not productive.
- Selling of shares which are quoted for a short period of time.
Show Solution
The Correct Option is A
Solution and Explanation
Step 1: Break down the trading action.
In short selling, a trader first borrows shares from a broker without owning them, then sells those borrowed shares in the open market at the current price.
Step 2: See how the profit or loss happens.
Later, the trader buys the same number of shares back from the market to return them to the broker. If the price has dropped in between, the buyback costs less than the earlier sale, and the trader keeps the difference as profit. This only works because the shares sold were never owned to begin with, which rules out the other three options about holding periods or clearing weak stocks.
Final Answer:
Short selling means selling shares that you do not currently own. \[ \boxed{\text{Selling shares you do not own}} \]
In short selling, a trader first borrows shares from a broker without owning them, then sells those borrowed shares in the open market at the current price.
Step 2: See how the profit or loss happens.
Later, the trader buys the same number of shares back from the market to return them to the broker. If the price has dropped in between, the buyback costs less than the earlier sale, and the trader keeps the difference as profit. This only works because the shares sold were never owned to begin with, which rules out the other three options about holding periods or clearing weak stocks.
Final Answer:
Short selling means selling shares that you do not currently own. \[ \boxed{\text{Selling shares you do not own}} \]
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