What do you call the action of either shorting a stock or betting against the market going up? I think shorting means buying shorts, but you can also buy ETFs that go up when the market goes down. What do you call the action of buying those inverse-ETFs? Do you use the word short? Or is there another expression for it?
1 Answer
To answer your question, 'Shorting a stock' is a perfectly normal and common expression.
In fact, when you 'short a stock' you borrow them from someone else, and then sell them. In doing so, you end up with cash, plus a liability to return the stocks to the lender at some point in the future.
If the stock goes down in value, you buy them back, return them to the lender, and keep the gain.
If the stock goes up in value, you buy them back, return them to the lender, and incur the loss.
Owning units in an ETF means you would still buy and sell them, you aren't shorting them. The ETF itself might be shorting, and hence you get exposure to shorting through your ownership in the ETF.
