Skip to main content
Glite Dictionary
short covering

short covering

1 8.1
To buy back shares you sold expecting their price to fall to close that position
  • noun
  • Specialized
translation icon : cobertura corta
  • The analysts noted that short covering contributed significantly to the upward momentum of the stock yesterday.

Examples

  • The rally since March has been a gargantuan short covering rally.

    Blog text (17)

  • My guess is that there was some significant short covering.

    Blog text (8)

  • It's quite possible that some of Friday's move can be associated with short covering.

    Blog text (13)

  • This indicates the current pace of outperformance is likely to spark some short covering, which would be bullish for KIE.

    Blog text (30)

  • Following the unexpected market drop, traders engaged in short covering to limit their losses.

  • Many investors predicted a surge in prices as a result of widespread short covering in the last hour of trading.

Synonyms

buyback
vsshort covering
  • Specialized
13 5.9

An agreement where someone buys back something they sold before, often a company buying its own shares

is used in trading to end a position opened by selling those securities

Surface Forms

short covering singular
short coverings plural

Morphology

short + covering

The element 'short' identifies the kind of position, and 'covering' carries a general sense of 'making safe' or 'closing', so there is a loose, partially predictable link to closing a short position. However, the specific financial action 'buying back securities to close out a short position' is a technical extension not directly derivable from the literal sense of 'covering', so a B1 learner would likely not infer the full meaning without exposure.

Etymology

Short covering comes from traders who 'sell short'. They borrow and sell shares hoping the price will fall, and later must 'cover' by buying those shares back. So short covering means 'buying back' shares you sold short to close the trade and limit losses.