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
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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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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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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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
375 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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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 ...
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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 ...
2
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1answer
766 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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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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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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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 ...
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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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3answers
694 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
38 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 ...
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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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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 ...
2
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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 ...
2
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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? ...
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?...
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3answers
452 views

Vegan hedge (shorting non-vegan, long vegan)

Edited in response to comments. How could I isolate a bet on veganism? (Assume that most of my wealth is already invested passively in diversified index funds and that for alpha with a different ...
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1answer
86 views

short selling time frames?

My understanding of short selling is... let's say you sell stock for $50 a share. If you purchase the stock for delivery two days later for $40 and then ship it you've effectively realized a profit ...
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3answers
316 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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3answers
538 views

What happens to a short seller, who wants to close his position, but there are no shares available for sale?

For the sake of argument, let's assume a scenario, where the company is very illiquid, and there are no shares for sale and even increasing the buy order doesn't produce sellers. What happens to the ...
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1answer
367 views

I don't understand what it means to “Sell” stock that you don't already own, can someone explain the intuition behind it? [duplicate]

I started a couple months ago to learn more about the stock market and financial education in general, but this particular concept was hard to wrap my head around. I understand there are bears and ...
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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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2answers
87 views

Covering my short sale

Will anything happen if I don't cover my short? Is there a time limit for when the bank forces me to cover it? Will they close my account if I don't cover? Thanks
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1answer
1k views

Can I short a stock for a long amount of time?

The next recession is inevitable, if what I read is to be believed. Whether it happens tomorrow, or in 10 years, it's coming. Why shouldn't I short many stocks, and hold on to them for whatever ...
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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
4k views

Why do speculators short-sell a stock when they wish to go short, rather than purchase put options?

I'm still trying to figure out, why, if a speculator believes a security will go down in value they use the tradition route of short-selling, when it would seem that purchasing put options is the less ...
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1answer
89 views

Why did SPVXSPIT drop 95% in February?

In February 2018, SPVXSPIT (S&P 500 VIX Short Term Futures Inverse Daily Index) seems to have dropped about 95%, but after much googling, there does not seem to be any discussion about this. The ...
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2answers
462 views

Profiting from an economic bubble collapse

An article in Business Insider argues that, despite the numbers, the US economy is fundamentally unhealthy. The current unprecedented corporate profits are essentially being subsidized by low quality ...
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1answer
212 views

Predicting a short squeeze

I have been following Tesla (TSLA) and I think there may be a short squeeze occurring. I was wondering if there are any tell tale signs, for when a short squeeze is occurring?
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1answer
302 views

Is possible to short sell stocks without using CFD?

the title is all my question :) Is possible to short sell stocks without using CFD?
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4answers
1k views

Sellers won't sell back shares in a short sale?

I'm trying to understand the concept of short selling shares in a bear market. Here's what I understand so far. Person A owns 100 shares Person B borrows 100 shares from Person A without Person A's ...
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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
137 views

What is the issue with naked shorts?

As I understand it, in the USA it is illegal to short (sell) an underlying asset without a counter-party that lends the asset (naked) for the sale. From the trader's perspective, why does it matter if ...
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4answers
10k views

How to profit off a stock price falling

How would one profit from a share price falling, granted that they correctly predicted it would happen? Say I had a hunch that a certain stock was going to fall next week, how could I effectively ...
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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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3answers
185 views

By pass the 100% limit in shorting: Capitalising on a Market Crash

I want to short a cryptocurrency that is highly overvalued. Let say its current value as of now is $10,000 , my intuition say that sometime next year like Feb its going to fall significantly to about $...
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2answers
127 views

How can a retail investor short the German car industry and its suppliers?

Suppose that I want to make a small investment of around 1000€ and that I want to short the German car industry and its suppliers over the long term (5-15 years). How would you do this?
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0answers
242 views

Can a buyout announcement cause a short squeeze above the announced takeover price?

Consider a company with heavily shorted stock. If that company puts itself up for sale and a friendly (shareholder approved) acquisition happens, can it result in a short squeeze driving the price of ...
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2answers
162 views

What is the long side of a short transaction called?

The way that a short sale occurs is that a person called the short seller borrows the item to be shorted from someone else and then sells it. The debt is for the item itself, so as long as it is ...