What Is Buying to Cover?

By Timothy Green – Updated Sep 10, 2025 at 12:46 PM EST

Key Points

Short selling means borrowing and selling stocks, aiming to buy back cheaper for profit.
Buy-to-cover orders help close short positions by purchasing enough to return borrowed stocks.
Shorting offers limited profit and potential unlimited losses, unlike owning stocks directly.

You can profit from a stock losing value by selling that stock short. In a nutshell, short selling involves borrowing shares from a broker and selling them on the open market.

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Person viewing charts on multiple monitors. — Source: Getty Images

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When you buy a stock, closing out your position is a simple matter of selling that stock. Closing a short position is a bit more complicated. In order to close a short position, the borrowed shares must be returned to the broker.

This requires the investor who shorted the stock to buy shares, hopefully for the investor at a lower price than the price at which the shares were borrowed. This act of buying shares on the open market to close out a short position is called short covering, or buying to cover.

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Short Sale

A short sale in real estate is an agreement to sell a property for an amount less than what is owed to the lender.

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About the Author

Tim Green is a contributing Motley Fool technology and consumer goods analyst covering companies in AI, cloud computing, retail, and other market sectors. Before The Motley Fool, Tim was in a doctoral program for computational physics. He holds a bachelor’s degree in physics from Rochester Institute of Technology.

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Timothy Green has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.