It stands for short against the box; a short sale against the box of a stock is a trade in which the seller actually owns the stock (has a long position in it), but does not want to actually close out the long position. In other words, this involves the selling short of a position equal to the long position the seller wishes to protect. This is in contrast with ordinary selling short, which is based on borrowing shares from a broker and selling them. The box means a safety deposit box where people, in the past, used to keep physical stock certificates.

The short against the box (SATB) strategy allows an investor to lock in his current gain, as it helps effectively offset any price movement on one side by that on the other. However, it requires, as in normal short selling, maintaining a margin account. Such a strategy provides an instrumental tool for investors to defer recognition of capital gain for tax purposes. But that potential tool is now constrained after the constructive sale rules were introduced in 1997. Specifically, if an investor is unable to close out the short position within 30 days following the end of the calendar year in which he entered into the position, or if he leaves the original gaining position uncovered for at least 60 days after the closing out of the short position, a constructive sale will be triggered retroactively from the trade date of the short position. This procedure will impose a tax on the original gain without even selling the shares.

It is also known as selling short against the box.