short covering

n.
The buying of securities, stocks, or commodities in order to close out a short sale.

The act of purchasing securities in order to close an open short position. This is done by buying the same type and number of securities that were sold short. Most often, traders cover their shorts whenever they speculate that the securities will rise. In order to make a profit, a short seller must cover the shorts by purchasing the security below the original selling price.

Also referred to as buy to cover or buy back.

Investopedia Says:
For example, suppose a trader has sold short 50 shares of ABC stock at a price of $10.00/share, because he speculated that ABC will not be successful in the near future. Unfortunately for the trader, the company has been recently very lucky and its price rose to $15.00/share. In order to limit his losses, this trader decides to cover his short position by buying back the 50 short sold shares at a price of $15.00/per share.

Related Links:
Have you ever correctly predicted a stock's decline or wondered how to be profitable in a bear market? Find out how and the risks involved. Short Selling Tutorial
This sinister version of short selling tries to profit by generating fear in the market place. Find out how you can help prevent "short and distort". The Short And Distort - Stock Manipulation In A Bear Market
Learn how to make gains even if you don't get in at the right time. Trading Is Timing

Actual purchase of securities by a short seller to replace those borrowed at the time of a short sale. See also Lending Securities; Selling Short.

Note: click on a word meaning below to see its connections and related words.

The noun has one meaning:

Meaning #1: the purchase of securities or commodities by a short seller to close out a short sale

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