Quote:
Originally Posted by tatorhog
I get that much, but the whole "borrowing" part. I never really understood that part of it. How do you borrow a stock to sell? I'm assuming its just a mechanism built within TDAmeritrade or whatever brokerage you use.
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You aren't really "borrowing". You are entering a contract that gives you the option to execute a trade at a certain point for a certain price. Until that point happens, you don't "own" the stock at all, you just own the contract that says you can buy X amount of shares at a certain point. You can sell that contract and never buy a single share of actual stock.