short selling

short selling (also known as shorting or going short) is the practice of selling assets, usually securities that have been borrowed from a third party (usually a broker) with the intention of buying identical assets back at a later date to return to the lender (expecting a bearish market)

short seller hopes to profit from a decline in the price of the assets between the sale and the repurchase, as the seller will pay less to buy the assets than the seller received on selling them
Naked Short selling
Naked short selling, or naked shorting, is the practice of short-selling a financial instrument without first borrowing the security or ensuring that the security can be borrowed, as is conventionally done in a short sale.

The transaction generally remains open until the shares are acquired by the seller, or the seller's broker, allowing the trade to be settled. If it is not settled the trade is considered to have “failed to deliver”
Mechanism of short selling..
1.The investor instructs the broker to sell the shares and the proceeds are credited to his broker's account.
2.Upon completion of the sale, the investor has 3 days (in the US) to borrow the shares. If required by law, the investor first ensures that cash or equity is on deposit with his brokerage firm as collateral for the initial short margin requirement
3.The investor may close the position by buying back the shares (called covering). If the price has dropped, he makes a profit. If the stock advanced, he takes a loss.
4.Finally, the investor may return the shares to the lender or stay short indefinitely.
5.At any time, the lender may call for the return of his shares e.g. because he wants to sell them. The borrower must buy shares on the market and return them to the lender (or he must borrow the shares from elsewhere). This is called ‘called away’ This happens when many people short sells a particular security