Shares to sell short have been located in order to be borrowed. Once sold short, these shares will be known as Short Covering.
In order to close off a short position at a profit or loss, short covering refers to purchasing borrowed securities back. In addition to buying back the shares that were borrowed for the short sale, it calls for purchasing the exact identical security that was initially sold short. It's called a "buy to cover" deal when this happens.
An open short position must be covered shortly in order to close it. If a short position is covered at a lower cost than the original transaction, it will be profitable; if it is covered at a greater cost than the original transaction, it will be lost.
When a stock with exceptionally high short interest is the subject of a "buy-in," short covering may also take place inadvertently.
To learn more about Short sales refer to:
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