A short position is an investment strategy where an investor sells a security they do not own, typically by borrowing it, with the expectation of buying it back later at a lower price to profit from the price decline.

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The process involves:

• Borrowing the asset (like shares of stock) from a broker.
• Selling the borrowed asset at the current market price.
• Later, buying back the same asset, ideally at a lower price, to return it to the lender, making a profit from the difference.
• The strategy reflects a bearish outlook, as the investor profits only if the asset price falls.

Short positions can also be established in derivatives such as options and futures contracts, where the investor benefits if the underlying asset falls in price. This technique carries significant risk because potential losses are theoretically unlimited if the asset's price rises instead of falls.

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