What is Naked Short Selling? Naked short selling, or naked shorting, is when a person or company performs a short sale on a stock without actually borrowing the stock or making sure that the stock can be borrowed. This means that the short has no cover and there may be issues when the time comes to cover if the trader cannot acquire the stock. If this happens, the result is known as a “failure to deliver”, and the transaction remains open until the seller can get his...

What Is a Stock Loan? A stock loan is a loan just like any other, that uses stock as collateral. It may also be referred to as “securities lending”, which is the same thing, from the different perspective: the entity that takes the stock is regarded as the borrower, and, using this approach, the cash amount is regarded as the collateral in the transaction. There are plenty of reasons why traders and investors may turn to stock loans. For example, some people may need to...