Questions tagged [shorting-securities]

Short selling of stock involves borrowing shares that one doesn't own with the intention of repurchasing them at a lower price. Short selling of an option involves selling an option without having an equivalent position in the underlying security.

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3answers
284 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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184 views

understanding the process/payment of short sale dividends

Reference the log/journal entries below... I'm trying to follow the accounting trail for the following scenario. 10/04/16  20:36 Sold 5 SPY 12/30/16 220 Call @2.52 $1,255.41 12/16/16  03:17 OPT ...
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77 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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92 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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2k 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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2k views

Can I short a stock in UK using a shares ISA?

If not please advise on other straight forward method (hoping I don't have to open a complicated account for this). Thanks
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1answer
991 views

Is there a time limit to cover an open short position? [duplicate]

Let's say there exists a stock X that I believe will soon embark on a general downward trend. I am interested in shorting X and decide to sell some quantity of X. I see my short position as being a ...
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734 views

How can one go short in Uber?

I believe Uber is massively overvalued and it will face down rounds in the near future. Assuming I can use all financial instruments, how could I short Uber?
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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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852 views

If prices are falling, who will lend shares to short sellers?

Short selling is a process that involves borrowing shares from a person, selling them and then buying them back at a lower price, thus realizing a profit. In this situation, knowing that prices are ...
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4answers
3k 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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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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616 views

Schwab wants to charge me interest on the money I received for selling TSLA short

Has anyone ever heard of a company charging you interest on short position? Should I try and open an account somewhere else if I want to short TSLA? This will cost me about $13 a day. I was called ...
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591 views

How can I make a profit by selling a stock short?

This link states: Shorting (or selling short) allows professional traders to profit regardless of whether the market is moving up or down, which is why professional traders usually only care ...
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1k views

Since many brokers disallow investors from shorting sub-$5 stocks, why don't all companies split their stock until it is sub-$5

Seems like a no-brainer? I guess if your security is not marginable, it can't be bought long on margin either, but I would also guess for most companies there are more margined shorts than margined ...
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413 views

Short selling - lender's motivation

It is not clear to me how the lender of the shares profits at all from short selling. The broker profits by lending the shares to someone else and then getting paid interest The short seller profits ...
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736 views

Why buying an inverse ETF does not give same results as shorting the ETF

I was reading on the pros and cons of shorting an ETF vs buying an inverse ETF on yahoo I do not understnad this explanation why over hte logner term, shorting is not equivalent to buying an inverse ...
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2k views

What do brokers do with bad stock?

I'm new to financial markets and how they work is still fuzzy, so bear with me. This question actually has multiple questions :( ... and a bit of a story. I was watching a YouTube video on the ...
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1answer
571 views

When short selling a dividend stock, what is the earliest date to cover and break even

Let's assume the ex-dividend date is 5/5/2016. 1) What is the latest date that I can cover before I'm on the hook for the dividend to begin with? 2) If I'm already on the hook for the dividend, ...
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531 views

How does the spread on an orderbook affect shorting?

Say I wanted to short ABC Company because I believe the stock price will go down 7% or more. The ask price is $6 and the bid price is $5. Volume is 4-5 Million shares. I decide to short $2000 dollars ...
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395 views

Insider trading of a linked security like an ETF your company has a heavy weighting in

Let's say you work for Apple, Inc as a middle class employee. This is a large publicly traded company. By the very nature of your employment there will be limited times that one can make purchases and ...
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1answer
2k 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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1k views

How to calculate how far a shorted stock's price can rise before broker issues a margin call?

If I short AAPL at 500$, how much can the stock rise before I get a margin call? Does it depend on how much Cash/Equity in other stocks I hold in my margin account? I just thought that if margin ...
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1answer
52 views

What happens if I short-sell a stock and the company declares a large cash dividend?

Suppose I have shorted a stock. Further suppose that the company now declares a large extraordinary dividend. Will I have to pay the large dividend? If I understand correctly, there will be no loss ...
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561 views

What kind of symbol can be shorted?

I am new to sell short concept. but I'm interested because I think some stocks may go weak in the future. I am using Firstrade but when I try to sell short some stock, it told me This symbol cannot ...
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1answer
421 views

Does the uptick rule apply to all stocks/ETFs and other securities, or only specific ones?

Does the uptick rule on U.S. securities apply universally across all stocks, all bonds, all futures and all options? Or is it limited to certain category of securities/instruments? Is there a ...
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834 views

Can i short securities in a normal(non-margin) account

When I take up a short position, I borrow stocks from my broker and sell them on the market. Does the broker charge interest for this? Also to do this, do I need a 'normal' account or a margin account?...
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284 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
555 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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1answer
165 views

How would I prove my claim in a class action settlement on a “stock misconduct” case when I shorted the stock?

In order to participate in a net settlement fund, a claimant must have "purchased or otherwise acquired stock". If I shorted does the stock did I "purchase it or otherwise acquire it"?
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237 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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181 views

When do I need to return short stock to the lender

Borrowing stock to short is like taking out a loan. You pay back the principal upon maturity plus interest. Interest in this case refers to short stock fees and dividends. What is the equivalent of ...
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1answer
5k views

Is 'days to cover' a useful metric in identifying the potential for a short squeeze?

When talking about short interest, the 'Days To Cover' is the avg number of days it will take to cover the short position and bring the short interest to 0. But is this figure actually of any use? It ...
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1answer
140 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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574 views

Why don't forced buy-ins of short sold stock happen much more frequently?

When you short sell a stock, you are borrowing the stock from a lender, and the lender always has a right to say that they need their shares back, which might result in a forced buy-in by your broker. ...
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226 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
349 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
8k 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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2answers
91 views

Calculation for Hypothetical Short Position

I'm trying to calculate the gain on a short position. I think I have the correct calculation, I just want to make sure I am correct. Here's the data: 1. Entered position with stock price at $28.07. ...
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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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499 views

Do most rookies make a fortune in a bear market by short selling and put options?

A friend warned me not to be over confident in my rookie years buying stocks. He said during a bull market, it is very easy for everyone to look like a winner. Can the reverse be said for rookies ...
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1answer
1k views

What would stop someone from taking advantage of wide bid-offer spreads in extended hours trading via short selling?

I understand that the less volume occurring in a security, the less liquidity (the wider the bid-offer spread). So my question is, in pre-market and after-hours trading, when bid-offer can widen ...
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397 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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3k views

Can I cover a short sale with the stock I already own?

Example Scenario: I short 100 shares of company XYZ. Incidentally, I also own 100 shares of XYZ. The price of XYZ goes down and I need to cover my short sale. Question: Can I cover using the 100 ...
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393 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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181 views

Differences between hedge funds and short selling

Both hedge funds and short take advantage from bearish markets, but what is the difference between them?
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2k views

How can I find out who the major short sellers are in a stock?

I'm interested in a stock that currently has a short interest of 40%. Which strikes me as huge, and unjustified in this case. Which, in turn, makes me wonder what I'm missing that all those short ...
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1k views

Consequences of not closing an open short sell position?

If I short sell stocks of a company but do not close my position by buying them back, what will happen? I realize it is a bad thing, but what exactly? I will need to pay a penalty?
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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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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 ...