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Definition: Selling of a stock that a person doesn't own. They hope to profit by buying the stock back at a lower price and returning it. Also called "shorting."
TeenAnalyst Advice: Shorting a stock is basically the same as making a bet that the stock will go down. The investor borrows the shares of stock, sells them immediately, and promises to return the same number of shares later (plus interest). If the stock goes down, they buy the stock back at a lower price and return them.
For example, if you short 30 shares of XYZ stock at $30/share and the stock falls to $20/share, you would have made $300 in profit.
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Hyperinflation