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Fancy Way to Say: Lock in a gain on a long position without closing the long What happens when: you're long with a hefty gain; you don't want to close your long and incur a large tax event; you believe the stock will trend lower for a while before turning to the upside again? The answer? Short the box. What one does is sell short against their long position. This is different than closing the long. Instead of having no position in the stock, one will be both long as well as short the same quantity of stock. While the net effect is that of holding no shares, the long was not sold. Thus, there is no tax effect. Gains are locked in up to that date as any fall in the long position is offset by the gain from holding the short. Conversely, if the stock continues to climb, gains from the long are offset by the loss in the short position. When the short sale is closed it creates a taxable event. The gain or loss will be reported. But once again the holder will be long the stock and resume participating in the appreciation of the shares. Or taking part in the fall.