An entity that sells financial assets (such as stocks, bonds, etc.) that it has borrowed and does not own at the time of sale. The selling entity will purchase such financial assets from the open market to fulfill its obligation. Short selling is meant to produce profits from the difference between the sale price and the purchase price. This is typically done in the expectation of lower purchase prices in the future.

Broadly speaking, short sellers bet on, and profit from, a decrease in a security’s price between the sale and purchase transaction dates.