Shorting a stock is like taking out a loan, but when you pay it back, you don't pay it back at the value you started with, but at the new value. So, if you shorted starting at $100, and it's now worth $10, you could keep those $90, and pay back just the $10.
The opposite of shorting is just buying the stock: exchange the market price $X for a share of stock today, sell later for $Y, profit or loss is $Y - $X. You've made money if the stock has gone UP. Since there's no upper bound on the price of a share but the lower bound is $0, you can lose at most your initial outlay $X, but potential gains are uncapped.
Shorting a stock is borrowing the stock: that is, you get a share of stock today (and sell it today for market price $X) but are liable for returning the share of stock at some time in the future (you obtain it from the market at $Y to do so). The profit or loss is thus $X - $Y. Since there's no upper bound on the price of a share but the lower bound is $0, you can gain at most your initial outlay $X if the price goes to zero, but potential losses are uncapped.
Long: you buy a stock, hold it, later on sell for profit or loss.
Short: you borrow a stock, sell it, hold the money and later on buy the stock back at a lower or higher price you originally sold it for. Then return the stock to the person who lent it to you.
pun intended
sorry :)
can anyone explain the difference between shorting a stock and the opposite of it, if any? and what both of them mean? ELI5, please.
I've read about it from long back, but have been too lazy or never thought to check out what it meant, since I don't do much share trading.
double sorry.