what is covered security in stock market?

A covered security in the stock market refers to a security (such as a stock) that is held in a portfolio and is being used as collateral for a short sale.

A short sale is a trading strategy in which an investor sells a security that they do not own, with the expectation that the price will decline. The investor will then buy back the security at a lower price, resulting in a profit.

To "cover" a short sale, the investor must purchase the security in the market to replace the borrowed shares that were sold. This is done to close out the short position and realize any profit or loss on the trade.

If a stock is being used as collateral for a short sale, it is considered to be "covered." If the stock is not being used as collateral for a short sale, it is considered to be "uncovered.