short sale by the holder of a long position in the same stock. Box refers to the physical location of securities held in safekeeping by the broker.
short sale by the holder of a long position in the same stock. box refers to the physical location of securities held in safekeeping. When a stock is sold against the box, it is sold short, but only in effect. A short sale is usually defined as one where the seller does not own the shares. Here the seller does own the shares (holds a long position) but does not wish to disclose ownership; or perhaps the long shares are too inaccessible to deliver in the time required; or, prior to the taxpayer relief act of 1997, he may have been holding his existing position to get the benefit of long-term capital gains tax treatment. In any event, when the sale is made against the box, the shares needed to cover are borrowed, probably from a broker. This technique was eliminated as a way to reduce tax liabilities in the taxpayer relief act of 1997.
