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Meaning & use

short position

noun·Advancedfinancetechnical

Last updated

UK/ˈʃɔːt pəˌzɪʃ.ən/
US/ˈʃɔːrt pəˌzɪʃ.ən/

Meanings

  1. nouncountable

    A trading position in which an investor sells borrowed shares or assets, hoping to buy them back later at a lower price.

    Grammar: Used with take, hold or close: take a short position.

    Patterns

    • take a short position in something
    • hold a short position
    • close a short position

    The fund took a short position in the airline's stock.

    Rising prices hurt investors holding a short position.

    She closed her short position after the share price fell.

  2. nouncountablefinance

    The total amount of a particular security or currency that a trader has sold short and not yet bought back.

    Grammar: Often used with size words: a large short position.

    Patterns

    • a large short position in something

    Traders reported a growing short position in the euro.

    The bank reduced its short position by buying back shares.

    A large short position in oil made the firm nervous.

Word forms

pluralshort positions

Common combinations

take a short position
Several traders took a short position before the earnings report.
hold a short position
The fund held a short position for six months.
close a short position
He closed the short position to limit his losses.
build a short position
Investors built a short position against the bank.
a large short position
A large short position can trigger a squeeze.

Synonyms and how they differ

short sale
Refers to the sale transaction itself, while short position describes the exposure you hold afterwards.
bearish bet
Is more informal and suggests only that you expect prices to fall, not the specific method.

Opposites

long position

Word family

short verb
to sell something you do not own, to profit from a drop
short seller noun
a trader who bets on a price fall
shorting noun
the act of selling short
position noun
an investor's holding in a market

Commonly confused: short position or long position?

short position vs long position

A long position means owning an asset and profiting when the price rises, the opposite of a short position.

Practice

An investor with a short position in a stock makes money when the stock ___.

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