Basic shorting | Stocks and bonds | Finance & Capital Markets | Khan Academy



Basic Shorting. Created by Sal Khan. Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/shorting-stock/v/shorting-stock?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Missed the previous lesson? Watch here: https://www.khanacademy.org/economics-finance-domain/core-finance/stock-and-bonds/stocks-intro-tutorial/v/bonds-vs-stocks?utm_source=YT&utm_medium=Desc&utm_campaign=financeandcapitalmarkets Finance and capital markets on Khan Academy: Can you sell something that you borrowed from someone else? Why, yes, you can and it is called "shorting". Why would you do this? Well, you can now make money if the price goes down. Is this bad? This tutorial has your answers. About Khan Academy: Khan Academy offers practice exercises, instructional videos, and a personalized learning dashboard that empower learners to study at their own pace in and outside of the classroom. We tackle math, science, computer programming, history, art history, economics, and more. Our math missions guide learners from kindergarten to calculus using state-of-the-art, adaptive technology that identifies strengths and learning gaps. We've also partnered with institutions like NASA, The Museum of Modern Art, The California Academy of Sciences, and MIT to offer specialized content. For free. For everyone. Forever. #YouCanLearnAnything Subscribe to Khan Academy’s Finance and Capital Markets channel: https://www.youtube.com/channel/UCQ1Rt02HirUvBK2D2-ZO_2g?sub_confirmation=1 Subscribe to Khan Academy: https://www.youtube.com/subscription_center?add_user=khanacademy

Comments

  1. it rarely fluctuates that much just pennies per share.
  2. but don't you risk needing a buyer to come in to (to cover?) doesn't someone have to purchase it at the price before "giving it back"..I prob misunderstanding.what if no one buys it?
  3. How does this differ from a put option? A put option to me just seems safer since you can always just let it expire.
  4. HI khann thanks for the video, very educational... Can you plz teach us about black- scholes formula??
  5. a man walked into bestbuy the other day, and wanted to short all the playstation 4's.
    the manager told him he was crazy.
  6. Is there an expiration date on the short option?
  7. So basically you ask your friend if you can borrow his new shoes. You then sell those shoes for $150. You wait until the retail price of the shoes drops to $100. You buy the new shoes for $100 and give them to your friend. You've just made a $50 profit...Just hope that the price of the shoes don't go up after you sell them !!
  8. You said that the holder of the call option who short sells can potentially lose and infinite amount of money. However, he will exercise his call option and buy the stock at $60, therefore only losing $10.
  9. perfect,learn lots
  10. long live the entrepreneur!
  11. investing in this manner isn't risky..its the unsophisticated investor who is riskiest of all!
  12. Good job explaining
  13. @gigelchiazna If you mean the time after which you have to COVER your short selling position then sometimes. If you borrow shares and the stock goes up, you have unrealized losses. The lender might get scared that you will not be able to pay back the shares if the price keeps rising and will demand you pay them back. As long as you have enough collateral in your account or the price is going down and you are profiting they will not "call" your short selling position and ask you to pay them.
  14. @allwayslong Because they are not really borrowing it. Most times they have the cash/equity to cover how much they BORROW so if you ever need the shares back you can get them immediately. In the case where they DO NOT have the cash/equity to cover you actually WILL get interest on whatever isn't covered with collateral. But of course you don't get the interest, your bank does. Because you will never know that your shares are being borrowed. They carry the risk, they get the reward.
  15. khan thank you so much, you make things so easy to understand.
  16. Thank you very much for your videos. I work on these themes and this is a very clear explanation! There are some requests that i would like to ask you to go over... where can i write you to ? rgds
  17. sometimes it's obvious a stock will go down ,BP for example after their oil spill .So, does it cost more to borrow stock in that scenario ?
  18. what does short borrow stand for?, is it the liablility of the stock? like when you buy a stock with CREDIT, then sell it for more.


Additional Information:

Visibility: 289730

Duration: 3m 29s

Rating: 135