Questions tagged [shorting-securities]

For questions related to the trading practice of short-selling, which involves selling securities or financial instruments that one doesn't own with the intention of repurchasing them at a lower price.

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1answer
74 views

What is the relationship between the short ratio, short interest record date, and short covering?

Assuming if company ABC settle short interest dated on September 8 (does it have to be mid or end of each month for every company to settle short interests or it is only when they have to report?), ...
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3answers
237 views

Exercise a put option when shorting is not possible

Sometimes when I want to short a stock, my broker says that no shares are available for borrowing. In this situation, can I buy a put and exercise it immediately and end up with a short position? in ...
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1answer
60 views

When I write an option, do I have to pay interest on it? And can I invest the proceeds?

I have two closely related questions about what happens when I write a naked option. My understanding of short-selling a stock is that as long as the short position is open, my brokerage will (or ...
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2answers
1k views

What is a Rebate rate when short selling shares

Investopedia says: The amount paid by a stock lender to a borrower who has put up cash collateral to borrow a stock. The stock loan rebate comes from the reinvestment of the cash collateral by the ...
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4answers
284 views

Daily trading: recovering price change as cash, what am I missing?

If I have a tool to predict daily direction of stock price change, is it possible to daily recover price change as cash? Say, my machine learning can tell me if tomorrow GOOG will close low or high, ...
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2answers
116 views

Fine-tuning index fund positions

In general, passive mutual funds (as well as ETFs) provide a good way to diversify without keeping track of and/or a large number of separate securities or paying high additional expenses. However, ...
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1answer
57 views

What is the effect of a short stock position on the value of an option?

I'm reading the book "Option Volatility and Pricing" by Natenberg and there is a paragraph I'm having trouble understanding. Chapter 7 (Risk Measurement 1), Page 98, Paragraph 2: The value of a ...
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2answers
221 views

price up under selling pressure

Why does share price go up in spite of tremendous selling pressure? I shorted one share after seeing one share where selling was three times more than buying but it went up.
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2answers
6k views

How to bet against the London housing market?

A lot of people are talking about a property bubble in London and I was wondering: how could you short the property market and bet on a crash? Is there any obvious way? Basically, how could someone ...
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3answers
210 views

How can you short a bond if you think it's going to default when it comes due?

For the first 29 years, a 30-year bond works more or less like any other security, and you can short it just like anything else. However, I'm interested in what happens if you want to short it at the ...
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1answer
79 views

Can capital gains from shorting a stock ever be taxed as “long term?”

Is there ever a situation where the capital appreciation from shorting a stock would be considered long term? My understanding is that the "holding period" for the stock is the length of time the ...
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2answers
374 views

Can a broker swindle money out of a client by short-selling stock in their name?

If a broker manages a client account, are they able to swindle money out of a client's account if they short sell stocks in that account? My mother had a friend who handled her Schwab account. He ...
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1answer
280 views

Choosing a strike price when you sell a short combo

Often different stocks that I want to short are not on my broker's "easy-to-borrow" list, so they are unavailable for shorting. A couple weeks ago I got serious about option trading and I found out ...
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3answers
113 views

Covering during a short squeeze

During a short squeeze: Assuming that there was one group controlling most of the free trading shares, would it be possible for this controlling group to hold out and not sell any stock to drive ...
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3answers
692 views

Do I have to pay interest on a margin short sale if I post full cash collateral?

Let's say that I have $100 in my account and I want to short sell stock A. Stock A is valued at $100, so therefore I sell one share of stock A. In order to do this, the account is a margin account. ...
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2answers
54 views

Closing a short position on the ex-dividend date

I understand that if I close a short position on the ex-dividend date then I owe the lender the dividend. It is taken from my account. Where does the money the company pays for the dividend on those ...
2
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1answer
763 views

What's the fastest way to get Hard To Borrow (HTB) stocks?

Often I find stocks that are Hard To Borrow (HTB) and I want to short them. However, many times, I see that on Think or Swim, I can't since they're HTB. Is there an "easy" way to find HTB stocks ...
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3answers
1k views

What happens if a short can't be covered?

My understanding is that when you short a stock you borrow it from a broker and the broker in turn usually borrows it from one of their other customers. Now let's say the stock suddenly rockets in ...
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1answer
89 views

How does short margin works internally?

I understand the concept of being short, but I don't understand how it works, maybe is easy to explain with an example: 1) A has $1 in his account. 2) B has $1 in his account. 3) A wants to buy ...
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1answer
205 views

Why do heavily shorted stocks do well?

I was looking at some heavily shorted stock which are shorted by big, institutional investors who know what they are doing and saw that some of them went up in the last six months. If so many smart ...
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2answers
185 views

Index Backed Short

If I have $200,000 in an index fund that mirrors the S&P 500, then I own the equivalent of 4+ thousand dollars in multiple high capitalization stocks. If I think that one of those stocks I already ...
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1answer
117 views

Can ETF be short-squeezed?

Can ETFs be short-squeezed? I'm not familiar with how they work. For ETFs like SPY, it seems it buys and sells stocks in the portfolio. For ETFs like UVXY, it seems it has no real stocks. How does ...
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4answers
2k views

Does short-selling hurt companies' stock price in the long-term?

Today, I've read a Bloomberg article on latest Musk tweet tantrums, where he, among other things, mentioned this: Short-sellers are value destroyers. Should definitely be illegal. Is that ...
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1answer
37 views

Merger/Acquisition on short and long symbols [duplicate]

I have a general understanding of how mergers and acquisitions work for symbols being traded in long positions. However, I am confused about how these events are calculated when shorts positions are ...
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0answers
84 views

Are short sellers responsible for damages in a securities class action suit?

Imagine that XYZ company was found liable for its misdeeds and its shareholders are awarded a compensation. Are the short sellers on the hook as well? That is, do they need to pay the amount of the ...
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3answers
122 views

Can shorting stocks from holdings make money?

Let's say I hold 5 shares of AAPL. I'm guessing that the stock price will fall with respect to the open price. So I sell at open and then it falls 10%. Then I buy it back which should give me the ...
5
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1answer
681 views

How do Related Hedges work?

I'm currently re-reading Benjamin Graham's book, The Intelligent Investor. In it (Chapter 15), Graham mentions some of the undertakings and operations his fund, Graham-Newman Corporation, was involved ...
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2answers
72 views

Explanation of stop loss of sell stop limit order to stop loss

Question What is the meaning of Stop Loss of the bracket in the Sell Stop Limit order on the current position? Background Having the position with the current price 59.80, thinking to place a sell ...
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1answer
29 views

Closing short position

Question In the situation below, I suppose there will be another order required to cancel the short position (bottom left), in addition to the order to buy back shared when the price moved in favour, ...
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2answers
217 views

Shorting diluting stocks

If a stock just submitted an 8-K that shows that it's diluting (has "cashless exercises", "dilution", and "warrants" in it), shouldn't that mean it's bound to go down (with a high level of likeliness)?...
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2answers
37 views

Short-Ratio, Short-Squeeze and Bullish Market

I am reading on various topics (as some may have gathered from posts). I understand the concept and implications of a short-sale pretty well. I understand how to interpret the short-ratio. Everything ...
5
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1answer
2k views

What happens if a company you hold short merges with another company?

I know how mergers (typically) work when you're long a company, you simply get shares in the merged company equal to your previous market value. But what happens if you hold a short position? The ...
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4answers
3k views

Why do people rarely execute options?

Options have recently sparked my curiosity as you can short a stock with a put option and only risk your premium (as opposed to shorting in a margin account) but I still have a few questions. Why do ...
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2answers
485 views

Is this legal: going long on call options and artificially increasing the price of the underlying asset seconds before expiration?

Let's say I bought a particular call option and own the majority of it. On the very last second (before the expiry date, seconds before the market closes), if I bought every single offer in the ...
2
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2answers
6k views

How do stops and limits work with short-selling?

My understanding of stock market orders right now is illustrated as shown: stock market orders However, if the price of a stock was trading at 22.00 and I wanted to enter a short position at a ...
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3answers
933 views

Shorting stocks: Indicators that a stock will drop?

I always see articles about "predicting when a stock will rise", but haven't found something for the opposite. Are there any indicators or combination of things that are proven to indicate that a ...
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3answers
7k views

When shorting a stock, do you pay current market price or the best (lowest) available ask price?

A stock has a last sale price of 2.5 dollars on the NYSE. Say I am shorting 1000 shares of a stock, there's an ask price of 3 dollars for 500 shares. Theres an ask of 3.5 dollars for 250 shares, and ...
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3answers
240 views

Shorting: What if you can't find lenders?

I understand the shorting means you borrow the shares and sell them first, and pay them back later. So this is two-step process and things can go wrong in each step. For example: What if you can't ...
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4answers
729 views

Shorting versus selling to hedge risk

If you own 10K shares of stock XXX and you want to hedge your investment, isn't shorting some of your XXX identical to simply selling some of your XXX? Doesn't either approach reduce your risk in the ...
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2answers
187 views

does naked call option assignment result in stock borrowing fees?

If I write a naked call option which gets exercised early, will I have a chance to purchase the stock to cover the call or will I already owe a stock borrow fee by the time I am notified of the ...
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1answer
74 views

Short position with bullish outlook

I am just starting to learn about options and about puts and calls. Traditionally, I assumed that being short on a position means having a bearish outlook to the market. However, when you are an ...
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4answers
88 views

Call vs Puts: a short position can profit using both depending on strike price?

I'm confused about whether you want to own a call or put if you believe a stock price will go down. Most articles have described owning Puts as betting the stock will go down, and calls as betting ...
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3answers
315 views

Does short selling create additional share in the market?

Let's say that I short-sell 1 share that A lent to me and B immediately bought from me. Doesn't this create additional share in the market because A will see it as "lent out" in his bank account and ...
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2answers
5k views

Shorting Obvious Pump and Dump Penny Stocks

Obviously there is a lot of risk involved, but I routinely see penny stocks (OTC) climb to unreasonably high levels of growth over very short periods of time (1-3 days), sometimes up to 9000% growth. ...
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2answers
162 views

Hedging against an acquisition of a stock

Let's say I have done research and have a view that a public company's stock will go down due to worsening fundamentals. So normally then, one can express that view by shorting the stock. However, ...
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1answer
2k views

What does the settlement date of short interest mean?

NASDAQ lists data like this for the short interest in Walmart: Settlement Date Short Interest Avg Daily Share Volume Days To Cover 4/30/2013 27,988,175 7,442,123 ...
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1answer
233 views

Selling short during short circuit breaker

Imagine a stock went down more than 10% intraday, triggering the short circuit breaker, aka Alternative uptick rule. Short selling is only possible higher than the best bid. But what happens exactly? ...
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2answers
4k views

Shorting a stock after dividend

Theoretically, the price of a stock should always fall whenever a dividend is paid out to shareholders. Is this true in practice? If it is, I can just short the stock before the dividend is paid and ...
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6answers
1k views

Buying and selling the same stock

If I buy a stock for say $1 and that stock goes up to $2, can I sell my initial investment being $1 and then buy back into the same stock when it goes back down to $1 over and over only using my ...
2
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1answer
97 views

How does selling a stock short affect my cash and margin positions in my account?

Example of my etrade account: I have $3k cash and $0 margin debt and my account net balance shows $50k. I then sell to open a $4k position in XYZ how does this impact the cash, margin and net balance?...