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.
If you short a stock at 100, and it reaches 10, you pay back at 10 and get to keep the remaining 90.
If, however, that stock reaches 300, you have to pay the extra 200 from your pocket.
So shorting is much bigger risk than investing directly in stocks.
There are less risky ways, like buying a put option.
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.
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.
the sale so shorte, the profitt so longe to earne ...