Selling Short

Selling Short means:
the sale of securities, commodities, or foreign currency not actually owned by the seller. In making a short sale, the seller hopes to cover, that is, to buy back, at a lower price the items that were sold and thus earn a profit, resulting in a short-term capital gain (loss). A hedging transaction in commodity futures results in ordinary income or ordinary loss. Former IRC (check if this IRC provision is current here) §1233.

See also Capital Gain in the American Legal Encyclopedia and Capital Gain in the World Legal Encyclopedia.