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What Is Naked Short Selling?

By Jeremy BowmanUpdated Aug 9, 2025 at 11:30 PM

Key Points

  • Naked short-selling involves selling unowned, unborrowed shares, aiming to profit by buying back cheaper.
  • It's illegal in the U.S. due to risks of market manipulation and creating artificial stock supply.
  • Accusations of naked short-selling sparked volatility, notably during the 2021 GameStop trading surge.

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