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

Hey everyone. This is Kirk here again at Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “What does it mean to go short a stock?” If you’ve been trading for a while or if you’ve been new to trading and investing, you probably heard this terminology thrown around. You might hear people say that there’s a lot short selling or there’s a lot of short interest or you might hear somebody say they’ve gone short or they go long a stock, but what does that actually mean? Well, I’m actually going to start this discussion by talking about the traditional sense of stock investing which is to go long a stock. And when you go long a stock, you take a long position which means that you actually buy stock first to enter the position. That’s the initial entry point for the position. And your hope is that if you buy stock at say $50 a share, you can sell it in the future at say $60 a share and generate a $10 profit. Now, what going short is, is you’re doing that process just in reve