Short Position
A position created by selling a security one does not own, which gains when the price falls and loses when it rises.
Formula
Profit or Loss = (Entry Price - Exit Price) x Quantity
Unit
₹
In depth
A short position reverses the payoff asymmetry of a long: the maximum gain is capped, because the price can only fall to zero, while the loss is theoretically unlimited as the price rises. That is why shorts require margin and constant monitoring, and why a short squeeze can be catastrophic rather than merely expensive. In India, retail shorts in the cash segment must be squared off within the same day; sustained short exposure is taken through futures and options instead. Being short is not the mirror image of being long in risk terms, only in direction.
Worked example
Short 500 shares at ₹200 and cover at ₹160: profit = (200 - 160) x 500 = ₹20,000. If the price instead runs to ₹400, the loss is (200 - 400) x 500 = ₹1,00,000 — larger than the position's initial value.
Illustrative figures, chosen so the arithmetic is easy to follow. Not a live price and not a valuation of any company.
Educational reference only
This entry explains what “Short Position” means. It is not investment advice and not a recommendation to buy or sell any security. Any numbers above are illustrative, not live prices, and nothing here predicts price direction or rates a stock. Consider your own circumstances and consult a SEBI-registered investment adviser before acting.