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 a decline in the market price of a stock will allow them to 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 that the investor will eventually have to buy back the stock at a loss to return the borrowed securities.

All short sales must be recorded in a margin account and be fully collateralize