what is short covering 
short covering refers to buying back borrowed securities in order to close out an open short position at a profit or loss it requires purchasing the same security that was initially sold short and handing back the shares initially borrowed for the short sale 1 this type of transaction is referred to as buy to cover for example a trader sells short 100 shares of xyz at 20 based on the opinion that those shares will head lower if xyz declines to 15 the trader buys back xyz to cover the short position booking a 500 profit from the sale investopedia ellen lindner