What is selling short and buying to cover?

Selling Short (Short-Selling) and Buying to Cover are two practices that are available to accounts with margin privileges.

Selling Short

Selling Short is when you sell a security you do not own in your account or that you borrowed on margin. Select Sell Short to short a position in your margin account. At a later time, you will need to buy to cover the position that was borrowed.

Buying to Cover

Buying to Cover is buying a security with cash to close out a position that was previously shorted (see above). By buying the number of shares equal to the quantity borrowed, your previous short sale will be covered. Select Buy to Cover to close a short position in your margin account.

Risks Associated with Margin

Margin investing involves greater risks and is not appropriate for every investor. Before using margin, you should carefully review the Margin Disclosure statement that was provided to you when you opened your account (a copy is available in Kapitall's Terms and Conditions). You should also evaluate your investment objectives, financial resources and risk tolerance to determine if margin is appropriate.

 

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