taking an investment position that
will benefit if the value of the
stock goes down. Traditionally, "shorting a
stock" means borrowing shares of stock from another broker, selling them, then buying them back (after the price has fallen) in order to return the stocks to the broker from whom they were borrowed.
You can
short a stock using a derivative; this can include buying futures in the stock (i.e., a contract to sell someone else the stocks); or buying a put option (also called a put). A third way is to write a call (i.e., a call option, also known as a call) for the stock.
Shorting a stock usually requires a great deal of
skill and courage; even the most talented
short will only make money during rare crises.