How can you sell shares you don't even own? This is called "selling short." Most people find this concept confusing, but it doesn't have to be.
- Selling short means you think this answer is not going to happen.
- The more shares you sell short, the stronger you feel this answer will not happen.
- If the answer doesn't happen, you will make money. If the answer does happen, you will lose money.
- Your cost is the price you would pay if you were buying the shares. Selling short doesn't actually require you to spend any money. It's like we're reserving shares for you if you decide to buy them later at whatever price they're at.
- The estimated new price is what impact you will have on the price. Remember, by selling short you are saying the probability this will occur is lower than the current price, so we lower the price according to how strongly you (and others) feel.