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Short Selling

Profiting when a stock falls

Short selling means borrowing shares you don't own, selling them, and hoping to buy them back cheaper later. If you short 100 shares at $50 and buy them back at $30, you profit $2,000. But your risk is theoretically unlimited — if the stock rises to $200, your loss is massive. The 2021 GameStop short squeeze showed what happens when shorts are forced to cover.

Quick check

What is the maximum possible profit from shorting a stock?