Short selling reverses the usual order: borrow shares, sell them now, and aim to buy them back later for less before returning them. The loan is a stock borrow. It carries a fee, it can be recalled, and while it's open the short seller owes the lender any dividends the shares pay. Large short positions in UK shares have to be reported to the FCA.
A share can only fall to zero, so the most a short seller can make is the price they sold at. A share can rise without limit, so the loss has no ceiling. When a heavily shorted share starts to rise, short sellers rush to buy back and cap their losses, and that buying pushes the price up further — a short squeeze. If the lender recalls the shares or delivery fails, a buy-in forces the short seller to buy back at whatever the price is at that moment.
The gain stops at £10 a share. The loss doesn't stop.
Educational content only. It is not personal financial advice.