Short Position

Short Position

Short positions are created when investors sell securities they do not own in the hope that the price declines. To set up the position, the short seller borrows securities through a broker or securities owner (such as an asset manager) through a repurchase agreement (repo) and sells them in the open market to a buyer. If the position is successful and the price of the security declines, the short seller buys the same number of securities back from the market at the lower price, delivers them back to the party from which they have borrowed them, profiting from the price differential.

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