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Comment by Sniperfish

Think of short as a negative share position. To close it out, buy the shares in the market at the (hopefully lower) price. You've (1) sold at a higher price and (2) bot at a lower price - profit is the difference.

Mechanically, the negative share position is achieved by borrowing shares to sell. This carries an obligation to give 'back' the borrowed shares, which is satisfied when you buy in the market.

parent Sniperfish 8 years ago

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