Sell Today, Buy Tomorrow (STBT)

Sell Today, Buy Tomorrow (STBT) is a short-term bearish trading strategy that involves selling shares today with the intention of buying them back the following trading day at a lower price — similar to intraday short selling but with the position carried overnight. Unlike BTST (which is a delivery-based transaction where shares are bought first), STBT is more complex in India's regulatory framework because pure short selling in the cash equity segment (selling shares one does not own) is significantly restricted for retail investors — the Securities Lending and Borrowing Scheme (SLBS) mechanism is required for legitimate overnight short positions in the cash market. In practice, most retail investors who wish to implement STBT-type strategies in Indian markets use the futures market instead — selling stock futures or index futures today and buying them back the next day when the anticipated price decline has occurred. This eliminates the regulatory complexity of cash market short selling while achieving the same economic exposure. For sophisticated investors using SLBS to borrow shares for overnight short selling, the STBT strategy is a legitimate approach when a significant negative catalyst (earnings miss, corporate governance concern, or sector-specific negative news) is identified after market hours. Overnight short positions carry gap risk — an unexpected positive development overnight can cause the stock to gap up at the next day's open, resulting in a loss even if the bear thesis was fundamentally correct in the medium term.