Shorting stock has long been a popular trading technique for speculators, gamblers, arbitragershedge fundsand individual investors willing to take on a potentially substantial risk of capital loss. Shorting stockalso known as short selling, involves the sale of stock that the seller does not own, or shares that the seller has taken on loan from a broker. Traders may also sell other securities short, including options. Short sellers take on these transactions because they believe a stock’s price is headed downward, and that if they maje the stock today, they’ll be able to buy it back at a lower price at some point in the future. If they accomplish this, they’ll make a sbort consisting of the difference leaening their sell and buy prices. Some traders do short selling purely for speculation, while others want to hedgeor protect, their downside risk if they have a long position—in other words, if they already own shares of the same or a related stock outright. Suppose you...