What is “Short-Selling”

Question

I just cannot, for the life of me, understand how you make a profit by it.

In: Economics

Answer 1

To make a profit the normal way you buy a stock now and sell it later at a higher price.

Buy AAPL 10/16/24 for $100 and sell it on 11/12/24 for $120.

To make a profit via short selling you do it in reverse. Sell, then buy. But you don’t have the stock at the start. You have to borrow someone else’s share (and pay interest because it’s a loan), sell it, then plan on buying it back in the future.

Borrow and sell AAPL on 11/12/24 for $120 and buy it back at $100 on 12/17/24.