Naked Shorting

What does it mean?
The illegal practice of short selling shares that have not been affirmatively determined to exist.

In Other Words...
Remember, a short sale involves the sale of stock that belongs to someone else. So, a naked short sale occurs when an investor sells stock without knowing for sure that it can be borrowed. In the U.S., before you can short sell a security, you must affirmatively determine that you can borrow the stock. Keep in mind that the details of this regulatory principle will vary across different jurisdictions.

Related Links
Short Selling Tutorial - Have you ever correctly predicted a stock's decline or wondered how to be profitable in a bear market? Here you can learn how short selling works and the risks involved in it.

Related Terms
Custody-Only Trading | Naked Call | Naked Option | Naked Position | Naked Put | Short Selling | Short Squeeze

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