Listen to a Business English Dialogue About Sell short
Eleanor: Hi Gabrielle, have you ever heard of “selling short” in finance?
Gabrielle: Yes, I have. Selling short is a trading strategy where an investor sells a security they don’t own, with the intention of buying it back later at a lower price to profit from the price difference.
Eleanor: That’s right. Why would someone choose to sell short?
Gabrielle: Someone might sell short if they believe the price of a security will decrease in the future, allowing them to profit from the decline in value.
Eleanor: I see. Are there any risks involved in selling short?
Gabrielle: Yes, one risk is that if the price of the security being shorted increases instead of decreases, the investor may incur losses, as they’ll need to buy back the security at a higher price than they sold it for.
Eleanor: Got it. How does the process of selling short work?
Gabrielle: To sell short, an investor borrows shares of the security from a broker and sells them on the market, with the obligation to buy back the shares later to return them to the broker.
Eleanor: Thanks for explaining, Gabrielle. Selling short seems like a strategy that requires careful consideration and understanding of market dynamics.
Gabrielle: You’re welcome, Eleanor. It’s essential for investors to assess the risks and potential rewards before engaging in short selling.