Literally, it refers to anything that is missing, unavailable, or nonexistent. Technically, it is used in conjunction with a contract of sale in which the object of sale (underlying) is nonexistent either legally (constructively) or actually. An actually nonexistent underlying has no manifestation in reality, while the constructively nonexistent underlying is what has been declared by shari’a as nonexistent, even if evidence indicates it does exist in reality. From a shari’a perspective, the sale of nonexistent objects (i.e., what a seller doesn’t own or possess at the time of the contract) is prohibited.
Ma’dum (Arabic script: معدوم) is similar, in concept, to “short” in conventional finance parlance.
