Legal Definitions - short

Definition: Short is an adjective used in finance to describe a situation where a trader sells a security or commodity that they do not currently own, in the hope that the price will fall. This is known as a short sale.

Example 1: A trader believes that the price of Company X's stock is going to decrease, so they sell the stock without actually owning it. This is a short sale.

Example 2: An investor sells a futures contract for gold, even though they do not currently own any gold. This is also a short sale.

Both examples illustrate the definition of short, as they involve selling something that the trader or investor does not currently own. This is done in the hope of making a profit if the price of the security or commodity falls.