The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to be answering the question, “Can we sell stock before buying?” And the short answer to this is yes, you can and this is what’s called short trading the stock or short selling the stock. What happens is in the background, when you want to start doing this, is you actually have to borrow shares from the brokerage or from somebody else who have shares available to borrow. And so, what you’re doing is you’re borrowing those shares from someone else and selling them in the open market (say you had $100 a share) with the understanding that in order to complete the trading loop, you’ve got to return those shares to the person you borrowed them from at some point in the future. Now, you hope as a short seller in this case or someone who’s shorting the stock that you can repurchase the shares in the future at a lower price, deliver the shares back to the person you borrowed it from, likely the broker and co