Short position

A short position is a market stance that profits when the price of an asset falls. It is commonly established by borrowing the asset and selling it, intending to buy it back later at a lower price and return it, or by entering a derivative contract that gains value as the price declines. The position loses value if the price rises instead.

Because prices can rise without a fixed ceiling, potential losses can be large. Shorting is the opposite of going long. A common misconception is that shorting requires owning the asset first; the defining feature is selling exposure you do not hold, typically via borrowing or a contract.