The sale of a security that is not owned at the time of the trade, necessitating its purchase some time in the future to "cover" the sale. A short sale is made with the expectation that the stock value will decline, so that the sale will be eventually covered at a price lower than the original sale, thus realizing a profit. Before the sale is covered, the broker/dealer borrows stock (for which collateral is put up) to deliver on the settlement date.