Pictures

Sunday, February 7, 2010

Short selling

Short selling a share mean you sell the stock before you own. This sounds weird isn’t it but this is the way it goes.

Short selling basically goes this way here the stock actually comes from the broker / brokerage firm who lends you the share in lieu you can sell this share but subsequently you need to buy this share from the market and thus returning back to the brokare.

Here the profit comes only if there is a loss for the share say for instance you had shorted a share for market price 100 and the then closed the short (covering the short) by buying at 98 then you are in a profit of 2 * number of share you shorted. In otherwords to be in a profit your shorting price should be higher and your closing the short (buying ) (covering the short) should be lower.

Posted by at

No comments:

Post a Comment

Subscribe to: Post Comments (Atom)

Quarterly Results

Lupin Q3 net up 38 pct, in line with forecast

Tata Steel Q3 net up 155% to Rs 1,191.75 cr

Canara Bank Q3 profit zooms 50 pct

Dena Bank Q3 net dips 4 pct to Rs 134 cr

Lanco Infratech Q3 net up 34 pct at Rs 106 cr

Motherson Sumi Q3 net nearly triples as sales surge

BPCL Q3 net down by more than half

Stock Terms and jargons

Active Share: An active share is the one which has a volume in trade (it has changed hands in many), these are the shares which are easy to buy or sell. which also may have some news sticked along with it.

Advance-Decline ration: It is also known as advanced decline ratio. This ratio is used to find whether market is in bullish trend or in the bearish trend, in other words whether the market is in advacing or declining. It is found by dividing the total number of advanced shares to the total number of declined shares. For instance: there are a total of 10000 stocks listed in the market of them 800 advances and 200 declines then the Advance Decline ratio would be 4 and since the ratio. Any value more than 1 would indicate a rising trend (bullish trend) and any value which is less than 1 would indicate a declining trend (bearish trend).

ADR: American Depository Receipt is a negotiable receipt issued by the US banks stating that the number of shares have been deposited with them. This can be directly traded in the stock market. This in turn eases an American investor to buy ADR than to buy an foreign stock in a foreign market. The rate of an ADR is close to the rate of the stock in the home market.

After-Tax:

Aging Schedule

AGM or Annual General Meeting

Amortization

Annual Report

Application-Money

Asset

Asset Coverage

Asset Financing

Auction Market

Auctioning of an Issue

Automated Screen Trading (AST)

Average

Averaging

Averaging In/Averaging Out.