What does "shorting" an option mean?

"Shorting" an option refers to taking a position by selling an option contract that the seller does not own. This action is typically done in expectation that the option's price will drop, allowing the seller to buy the contract back at a lower price in the future, thus making a profit. When an individual sells an option they do not own, it's a speculative strategy that carries significant risk, as there is potential for unlimited losses if the market moves against the seller.

In contrast, the other choices describe different actions related to options trading. Buying an option in anticipation of a price increase represents a bullish position, while holding an option until expiration or exercising an option before expiration both relate to how one manages existing options rather than initiating a short position. Therefore, the accurate interpretation of "shorting" solely corresponds to selling an option contract not owned.