Naked short selling is the practice of short-selling a stock without first borrowing the shares or ensuring that the shares can be borrowed as is normally required. It was declared illegal after the financial crisis of 2007-2008 due to its potential to cause undue price manipulation and market downturns. Naked short selling involves selling shares that the seller does not own, hoping to buy them back at a lower price in the future.
« Back to Glossary Index
About the author
Jenna Lofton, MBA is a stock trading and investment expert with over a decade of experience in the financial industry. She began her career as a financial advisor on Wall Street and now helps everyday investors make smarter financial decisions through StockHitter.com.
Her insights simplify complex financial topics into actionable strategies for beginners and seasoned traders alike.