Short sale of stock rules
Your short sale is treated as a constructive sale of an appreciated financial position because a sale of your Baker stock on the date of the short sale would have resulted in a gain. Your short sale is treated as a constructive sale of an appreciated financial position because a sale of your ABC stock on the date of the short sale would have resulted in a gain. You recognize a $600 short-term capital gain from the constructive sale and your new holding period in the ABC stock begins on September 10. Key Points About Regulation SHO I. Short Sales A. What is a short sale? A short sale is generally the sale of a stock you do not own (or that you will borrow for delivery). Short sellers believe the price of the stock will fall, or are seeking to hedge against potential price volatility in securities that they own.