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Glossary · PSX term

Short selling.

Short selling is selling borrowed shares hoping to buy them back cheaper for a profit.

Definition

On the PSX, short selling is regulated and generally allowed only on eligible securities under rules such as uptick requirements and borrowing through approved mechanisms. Losses on a short can be large because a stock can rise without limit.

Worked example

A trader who expects a stock to fall borrows and sells it at Rs. 100, aiming to buy it back at Rs. 90.

Related on PSX Clarity

Term
Securities Lending and Borrowing (SLB)
Term
Leverage
Term
Volatility

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