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Gold/Mining/Energy : Solv Ex (SOLVD)
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To: Gary L Schultz who wrote (5731)7/2/1998 7:37:00 PM
From: Gary L Schultz   of 6735
 
JJB,

I realize, as do you, that naked shorting is legal. Covered shorting is when I own a stock and sell it short - but don't deliver the stock. This does affect the market, since my broker has to borrow the stock if he doesn't have some lying around, so he can sell it in the market. When I cover (ie deliver my stock) the contract is satisfied and the broker or the person who loaned the stock is replenished. The only affect on the market would be on first side (sell side) since I own the stock (in the box) I need not enter the market to cover my postion - all I have to do is deliver what I have already been paid for.

I doubt that there are any (if ever) covered shorts in this stock.

Naked shorting (which is perfectly legal BTW) is if I sell the stock but don't own it. My broker is supposed to (yea) either use his stock or borrow stock to sell in the open market. This affects price. When I cover (buy) my position, I enter the market and buy the stock. This affects the price. Now is the case of SOLV. If I had shorted at 18.00 last year - you better believe I would have covered by now!! What is there to be gained by waiting for bankruptcy (they changed the tax laws remember?) and the potential gain in SOLV (from the short side) is minor at best.

The "naked shorts" that most people have been alluding to would fall under the scenario I put forth in my previous post. If this happened then there would be no effect on the market.

Have A Happy 4th All,

Gary
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